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You are currently browsing the Stop Michigan Foreclosure weblog archives for March, 2009.

Loan Modifications

In my last blog, I talked a little about options for families like yours who find themselves in default (behind on payments) on their mortgages and facing a Michigan foreclosure. I commented specifically on workout plans; now I’d like to talk a little more about loan modifications.

Many different lenders offer many different options for you when you are facing a financial hardship.…too many, in fact, to cover in just a blog. Basically a loan modification is just that – it is a plan to modify or change the terms of your original mortgage to allow you to stay in your house.

Some modification options may include reducing the interest rate (or maybe simply converting a variable rate to a fixed rate), extending the life of the loan (maybe from 20 to 30 years), or reducing the principal balance (although these are very rare).

Like workout plans, these options may be helpful to you if you’ve experienced a temporary hardship. It’s always a good idea to speak with your lender to determine whether a loan modification will be a good fit for you. Remember, 80% of families who complete a modification are back in default 6 months later. So be sure that any modification you agree to is a permanent solution.

If, however, neither a workout plan or a loan modification seem to be a possible solution for your situation, selling your house via short sale may be your best option. For more information on short sales, call Emily “Mom” Danger today.

Melissa

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Is It Too Late For Me?

It seems like lately, we are getting contacted a lot by people we talked to months ago – trying to stop their Michigan Foreclosure. Back then, they were not ready to work with us for whatever reason. Their hardship was too overwhelming, they thought they had it worked out with the lender, etc. Now, they are coming back and saying “Is it too late to work with me?”

The answer is “…… it depends”…

It depends on where you are in the foreclosures process.
It depends on what has happened with your hardship since we last talked.
It depends on what the lender has done since we last talked – have they gotten someone in your house?

Every situation is unique and has its own nuances and issues. If the lender has gone ahead with the foreclosure (sheriff) sale, it doesn’t necessarily mean it is too late. Sometimes there are more options after the foreclosure sale and sometimes fewer. The only way to find out if we can still help you is to call us and ask.

We are still here and there is still never a fee when you work with us. We will be working hard as Michigan’s #1 Foreclosure Solution and Short Sale Team to help someone – it might as well be you.

Ann

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Houses Are Selling – Debt Is Getting Wiped Out

If you continue to pay attention to the media, you may think the world is coming to an end at times. Not from our experience. Contrary to what you may be hearing, we’re working with our Elite Realtors® (and others) and selling (and closing) on houses at a rapid pace.  Here are two more testimonials about our team from recent closings.  We have 4 more closings scheduled at the end of this month.

Shut that TV off and let us help you too! Want to read more more testimonials? You’ll find them here and here.


“Emily and Joel at Great Lakes Home Solutions and the team at Assist2Sell were great to us. They helped us get out of the foreclosure mess that we were in after my husband lost his job and we fell behind on the high mortgage payments. They were all very knowledgeable of the foreclosure process. They were able to clear $12,000 of debt and got the mortgage company to settle through a short sale. They gave us the chance to be homeowners again. We would recommend this team to anyone. Thanks guys!

David & Bobbi, Hamilton, Michigan


“My wife and I moved to the east side of Michigan from Battle Creek due to a new job. We had tried to sell our house for two years without one offer. I saw the website online and called Emily. My wife was very skeptical, but we met with Great Lakes Home Solutions and we were immediately impressed. There were very thorough with explaining the process and communicated with us often. They were able to sell our house [including the short sale] in five months and were able to wipe out $56,000 worth of debt. We were very impressed and would recommend them to anyone struggling to sell their house.”

Ryan & Carla, Battle Creek


Joel

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“I Can Not Change The Laws Of Physics Captain!”…

… this of course is said with a strong Scottish ascent.

Now, if you’re an original Star Trek fan, this needs no explanation. For those that aren’t, here’s a short one: Captain Kirk would frequently get his ship and/or crew in such situations that he’d need his chief engineer (Mr. Scott – “Scotty”) to bail him out. He’d have to do things like re-start the engines in 5 minutes (a normal 60 minute process) or get the Enterprise to run at warp 12 (normal top speed is warp 8). More than one time, after this request, Scotty would reply “I Can Not Change The Laws Of Physics Captain!”

What does this have to do with Michigan foreclosures? Here’s a story…

Yesterday I talked to a gal in Kalamazoo convinced she would find an answer to her problem – she just needed to talk to enough people. Now I’m all for that. Every person she talks to will have a different twist on the situation, and offer different suggestions. I certainly don’t know everything! The problem is, she wanted it all. She wanted to keep her house, her cars, all of the stuff she bought on credit cards, but make most of the debt go away.

Let’s just focus on the house. She had a “normal” (before she got behind) house payment of $1500 a month. She got behind because of health issues and a job loss (normal reasons that cause this – which is why so many people are losing their houses to foreclosure in Michigan. She wanted to keep her house, and have a payment of $800 a month. I did the math – she’d have to refinance at a rate of about 1.5% in order to get this done. There’s two problems with this plan.

1) If she had perfect credit today (which she doesn’t since she’s 120 days late on her mortgage), the best 30 year fixed interest rate loan I’ve seen is a around 6%. But of course because of her credit, no one will finance her – at any interest rate.

2) You can’t get caught up by slowing down. Here’s the analogy: If you’re in a row boat with a small leak (a mortgage payment), as long as you keep bailing the water out (making your normal monthly payment), you’re OK – you won’t sink. If you stop bailing for a period of time (lose your job and can’t pay), and want to not sink, you have to bail faster (start making bigger payments). She wanted a way to plug the hole (get rid of her mortgage payment but keep the house), but of course, you can’t change the laws of physics.

I felt bad when I hung up – I tried to help and explain there were other options besides the eventual Michigan foreclosure that was bound to happen. But, she was just so focused on the belief that someone would have an answer, there was nothing I could do. She’s going to have her head in the sand for 4 more weeks until the foreclosure sale at which point it could be too late for me to help.

The moral to the story? Realize that no one, not even Scotty, can change the laws of physics (or finances)!

Emily

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Upside Down But No Hardship

A Realtor® sent Emily a referral yesterday to a couple who wanted to sell their Michigan house but owed more than what it was worth. He asked if we could help by doing the Short Sale -that is, negotiating a discount of the mortgage balance with the lender so the house could sell in today’s market.

Emily called the couple to find out more about their situation. She found out that they had no hardship and could still afford to make the house payments.  There was no Michigan Foreclosure to stop.

Emily had to tell this couple and their Realtor® that we could not help in this situation because there is no hardship. We are not in the business of asking lenders to take discounts when the loan is current and the borrowers can make their payments if they choose to. We will never tell you to stop making payments to your lender

All this couple can do is to keep making their payments, preserve their credit and wait for the market to correct itself. It can be a hard thing to hold on to a house that you know is worth less than the loan you are paying for it, but that is simply the right thing to do.

Do the right thing. We will. If you are unsure what the right thing is for you. Call Emily and discuss your situation. She may not tell you what you want to hear, but she will tell you what you need to hear. That’s why we call her “Mom”.

Ann

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Understanding The Housing Recovery Plan

We have gotten a lot of calls about what President Obama’s Housing Affordability and Stability Plan really means. Based on our research, I’ve summarized what we’ve learned so far. At this point, not all of the details are available as they still seem to be working them out.

I’ve tried to keep this summary as simple and basic as possible. Why? The more we read in the press, the more complex and unclear the plan seems to be. I’ve also tried to limit the overview to the situations most common with the families that call our office daily.

Keep in mind that if your house has already gone to the foreclosure sale (i.e. you are in the “redemption period”) none of these options are available to you.  Your only options during the redemption period is to pay off your loan(s) in full, or to sell via a short sale.

There are two parts to the plan: Affordability and Stability

Affordability

This portion of the plan will give you a chance to refinance your mortgage to current interest rates, thereby making your payments more affordable. If you are currently facing high interest rates following an adjustment in your ARM (adjustable rate mortgage) interest rate, this will give you a chance to switch to a lower fixed rate mortgage. This is awesome news, but watch out for the “gotchas”.

Do You Qualify under the “Affordability” Portion of the Plan? (check this government web site for more)

  • You must have a mortgage guaranteed by Fannie Mae or Freddie Mac.
    • Call us and we’ll help you figure out if this is the case for your loan. If it’s not, you can not participate.
  • You must owe between 80% and 105% of your house’s current (in today’s market) value.
    • This is a HUGE gotcha for almost everyone we talk with. Why? Because if you financed your house at 100% sometime over the last 5 years, the value has likely gone down drastically here in Michigan and you will owe more that 105% of the current value. If you are like most people that call us, this will eliminate this option for you.
  • You must be current on your payments. “Current” means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months.
    • Yet another HUGE gotcha. This portion of the plan will not help you if you’ve fallen behind already.
  • Your interest rate will be a current “market” rate (which may actually raise your payment in some cases).
  • If you have mortgage insurance (like “PMI”), the insurance company must agree to insure the modification of your loan.
  • Additional restrictions apply if you have a 2nd mortgage (call us for details)
  • Your lender does not have to participate!
  • If you owe more than 105% of the current value or if your loan is over $417,000, you will not qualify for this portion of the plan.

Stability

This portion of the plan will help you if your payments have risen to 40% or more of your monthly income. Your lender is being given financial incentives from the government to participate in this program, but they have a choice: Your lender does not have to participate!

Do You Qualify under the “Stability” Portion of the Plan? (check this government web site for more)

  • If you owe more than your house is worth (I have not seen a definition of this yet).
  • If your debt to income ratio is “high” (I have not seen a definition of this yet).
  • You must still live in the house (if you don’t, you will not qualify)
  • If you owe under $417,000
  • If you qualify: Prove you can afford the new payment (plus your 2nd mortgage – see below) at an interest down to no more than 2%.
  • If you didn’t lie about your income when you received your current loan (remember those crazy “no doc” loans?)

The major tool for reducing the payment is rate reduction, with balance reductions only a last resort.  So if you’re “upside-down”, you will remain that way.

Additional details on this portion of the plan are mostly speculative at this point.

There is a major problem with this portion of the plan:  The $75 Billion allocated for this is to give incentives to first mortgage holders, not second mortgage holders.  So, say your first mortgage is offering a loan modification that works for you.  They are doing this because of the money they will get from the government.  What about your second mortgage?  Will you still be able to make that payment?  If not, they won’t just “go away”, they’ll want to get paid.  Because this portion of the plan does not allocate funds to second mortgages holders, you still may not be able to make your total mortgage payments.

Remember, at this point, the guidelines are not finalized and the two things are clear: You need to qualify (these programs will not help everyone) and your lender does not have to participate. Don’t waste your time hoping these programs will help you if you learn now that they will now. Based on the restrictions, you still may end up looking dead ahead at a Michigan foreclosure. If that’s you, we can still help by getting you out from under it so you can make a fresh start. Call us to learn about all of your options.

Joel

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Please Tell Your Realtor

Yesterday I talked to one seller who hasn’t told his Realtor® he is 4 months behind on his loan. I talked to a Realtor® yesterday also  (different house) about his listing that was in a Michigan foreclosure and he didn’t know it. WOW!

OK, let’s get this straight – please! If you decide to work with a Realtor® that is not part of our team (who’ve we’ve trained the correct way to work short sales), you need to at least watch this video and learn how to qualify your Realtor® to be sure he/she knows how to negotiate short sales.  And, before you sign the listing agreement PLEASE let him know if you are behind on payments or facing a Michigan foreclosure.

You need to give her an opportunity to help you. Also, don’t feel you’re locked into a listing. Any broker (the Realtor’s® “boss”) will release a distressed seller from a listing when better options are available to them. Be honest, tell her what’s going on, get her opinion, and get the opinion of someone who specializes (full time) in foreclosures (um, that would be our team). Shameless plug? Yeah, I know but hey, where else are you going to turn for the truth about foreclosure in Michigan?

Joel

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Look At The Big Picture

If you’re reading this, chances are you’re in a tough financial situation and likely facing a Michigan foreclosure. Maybe you’ve never experienced something like this in your life, and you don’t know what to do. It’s very humiliating and frightening to realize that, for whatever reason, you’ve lost control of your finances.

What you need to realize is that life happens, and it’s not always pretty. What separates the strong from the weak is the ability to “pick yourself up, dust yourself off and start all over again”. You have to look at the big picture and realize that this will pass; it’s only a speed bump.

That’s not to say that you should just turn a blind eye to your situation and ignore it. That’s the worst thing you can do. You need to meet it head on to deal with it effectively. That’s where we come in. Emily “Mom”, our Case Manager, will be happy to explain your options to you, free of charge. However, she can’t help you if you don’t call.

Time may be running out for you. This is one situation that shouldn’t be put off until tomorrow. Take five minutes and call Emily today!

Ann

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