Poor Strategy When Facing Foreclosure

In some markets more than 1 out of 10 homeowners are dealing with a pending foreclosure. The most common initial reaction is to avoid the lender and bury one’s head like an ostrich hoping to avoid danger. It is impossible to hide from mortgage obligations without dire consequences but a proactive strategy can produce positive results.

The first step is to stare the problem right in the face. You’ve got to deal honestly with the questions at hand. For instance:

* Could you afford to stay if the payment was lower?
* Are you expecting that you can catch up on arrears?
* Do have the money to move if evicted or sold as a short sale?
* What would be the effect of a deficiency judgment on your financial condition, both present and future?

Next is to determine the goals of your strategy. Where do want to be when this is over?

* Do you want to stay in the house if the payment can be made affordable?
* Do you owe much more than the house is worth and just want a way out with some damage control?
* Do you need to stay in the house for as long as possible without being able to make any mortgage payments?

Your options will be dictated by how you have addressed the above questions and defined your immediate goals. The most common options include a refinance or modification of the mortgage, a sale of the property, negotiating a deed in lieu of foreclosure or just stalling what may be an inevitable foreclosure. Most important to remember is that in most states a foreclosure is a legal procedure. Richard Weinstein, an attorney in Jupiter, Fl specializes in foreclosure defenses and explains that, “there is much too much at stake for the average individual to try to properly address all the issues of the foreclosure process. The homeowner has rights they must demand and possibly assets they need to protect. Unrepresented borrowers very often find themselves unnecessarily homeless and still hopelessly in debt.”

I couldn’t agree more! I have seen too many regretful real life experiences with disastrous results that could have been averted if the homeowner in distress had gotten proper advice before it became too late. The sooner the dangers are acknowledged the more options that remain available, both practical and legal.

Some have advised that the first person to talk to is your lender. Here I disagree. Doesn’t it make more sense to first speak with someone who is already prepared for your lender’s response and knows what information should be shared? If you find yourself in the position that you cannot meet your mortgage obligations I encourage you to speak to a mortgage professional that is well versed in all possible remedies. Elite Lending offers free consultations for homeowner’s in need. Please call 516-575-5626 for more information and visit www.EliteLending.biz.

Now that negative equity sales are accounting for more than half of the transactions in many markets if you’re not involved in any short sales you might be getting left in the dust.  Real Estate Agents, Mortgage Brokers, Short Sale Negotiators and Title Agents are all wrestling with the same beast - no matter how hard you work and how high your level of expertise, many short sale transactions will fall apart.

Lately, second mortgage holders have had no qualms about squashing deals over a few thousand dollars.  Just when FNMA and Freddie Mac have announced they will protect Real Estate Agent commissions in short sale negotiations, second lien holders are insisting on higher pay-offs and suggesting it comes from commissions.

Here’s a quote from a recent conversation with a negotiator in Citi’s loss mitigation department: “Citi’s position is that real estate agents should not profit from short sales and should share in the losses”.  Some lenders, including Bank of America and Citi, have suspended progress on many negotiations midstream until new authorization forms are signed on their letterhead.  Countrywide has insisted on second lien pay-offs before making determinations, then closed files if it takes more than a few days to get attain them.  Of course by now we are all getting accustomed to documents being lost or misplaced as part of standard operating procedure in loss mitigation departments.

As frustrating as all this sounds, nothing is more disappointing than working hard (very hard), for months and finally getting an offer accepted by the bank only to find the buyer, for whatever reason, is no longer interested in proceeding.

The reasons are many, but most could be avoided if the lenders could condense the timeline on the negotiating process.  In many instances the buyer’s due diligence clock doesn’t start until the offer is accepted by the lender and the buyer can choose to walk with limited consequences.  Now, everyone involved has run the gauntlet and the accepted offer is without a buyer!  Real Estate Agents, Mortgage Brokers, Title Agents and Short Sale Negotiators are “all dressed up and nowhere to go”.  The work has all been done and no one is getting paid! The distressed sellers and disappointed Agents need to find new buyers before the lenders acceptance of the offer expires, normally in 30-45 days.

Once again, time remains the # 1 obstacle to a smooth and successful short sale transaction. On the selling side it takes the form of the time spent negotiating with the lender and keeping the buyers engaged, all the while trying to keep the property from getting to the courthouse steps.  From the buyer’s side of the market, there is a teeming interest in purchasing these deeply discounted properties but without waiting for 4-6 months to see if an offer will be accepted while other opportunities come and go.

Many real estate professionals are finding salvation in a brand new, free cooperative service at RealEstateRoadkillUSA.com.  The website takes these “accepted offers in need of buyers” and presents them, not only as the best deals in the market, but ready to close immediately.  Remember, once an offer is finally accepted the lender doesn’t care who the buyer is as long as the bottom line remains the same.

Although the service has only recently become available, real estate agents and buyers are flocking to the website like bees to honey (or vultures to carrion).  These are the absolute hottest deals available and all the work has already been done to prepare them for closing.  Wouldn’t you have to be crazy to buy any property without looking here first?  Likewise, if the buyer is lost on an accepted offer it makes perfect sense to post it on RealEstateRoadkillUSA.com immediately.  Currently the website is servicing limited areas but opportunities exist for enterprising real estate professionals poised to serve as “gatekeepers” in their market.  Details are available in the “Join Our Network” section.

Like it or not, short sale transactions are going to represent a growing market for years to come.  Lenders are being encouraged to exhaust all options before foreclosing and hopefully they will streamline and homogenize the process in the months to come.  In the meantime we can only try to work smart and diligently to avoid “All Work and No Pay”.