Stop Michigan Foreclosure

Winter is here and the lenders are getting aggressive and breaking into people’s houses!

We received a call last week from Amy, an angry homeowner who was behind on her house payments and facing a Michigan foreclosure. The foreclosure wasn’t why she was angry, however. Someone had broken into Amy’s vacant house, changed the locks and winterized the house. Amy demanded to know who would do such a thing? Guess what Amy, you don’t have to guess. It was your bank protecting their asset – the house.

One look outside will tell anyone that winter has definitely arrived in Michigan. While this might mean fun in the snow for kids of all ages, it means freezing pipes to lenders. Consequently, lenders tend to be a lot more aggressive in taking control of delinquent houses during the winter.

What does this mean to you? If you are facing a Michigan foreclosure and the house is vacant, you can virtually count on the bank securing the house and winterizing it. Yes, they do have the right to do this – it says so in your mortgage.Sometimes they’re mistaken and do this even if it’s not vacant (yes, we’ve had amazing stories like that!)

Once they claim the house is abandoned (even if it’s not), they can also accelerate the foreclosure or redemption period giving you less time to try to fix the problem.

The solution?  If you are facing a Michigan foreclosure and the house is vacant, call us. We have strategies to keep the bank off your back and out of the house so you have the time you need to sell the house or pursue other solutions. Take action before action is taken on you.

Ann

I got a call from Mike who was behind on his house payments yesterday and like many, facing a Michigan foreclosure on his house.  Yep, me!  Not Emily (“Mom”), Joel (“Fix It”) or Melissa (“Bank Bully”).  We’re all perfectly capable of filling in when Emily and Joel are tied up.

The other unusual thing about this call was that Mike worked for the lender who had started foreclosure proceedings against him (National City).  He had managed to stall the foreclosure previously with the help of people he knew at work.  Even with this inside track, they had still eventually started foreclosure since they weren’t getting paid.

Now he was calling us for help and had lost valuable time.  He was amazed that we had better contacts at National City than he did, even though he worked there!

You may not know someone with an inside track at your bank, but you know us.  If you have spent any time reading our blog and watching our videos, I’m sure you know we are real people who will work harder than anyone to help.  Give us a call now. Don’t let valuable time pass by.

Ann

Not a day goes by when we don’t get several calls from homeowners asking about the government bailout programs that have been announced.  Searching on “bailout” on our BLOG will show that this is the third update we’ve written.

We learn a little more every week.  There is still nothing earth shattering to report, but here’s what we do know so far.

• Your lender must be willing to participate in the program.  Most of the major lenders are still not participating according to this article because they either haven’t figured out how it works and how to get the money, or they simply don’t have the people on staff to handle the requests for workouts.
• You must have enough income currently to qualify.  The above report says you’ll need to spend no more than 31% of your gross monthly income on your mortgage, insurance and taxes, while I’ve seen other reports that put this up to 40%.
• Your lender must be willing to discount your loan amount to 90% of the current market value of your house.  For example, if you’ve refinanced when the market was good, say to $130k, but your house is only worth $100k now, your lender has to be willing to accept $90k and write off $40k.  How likely is that?  No one knows yet.
• If your lender has already foreclosed, and you are in the redemption period in Michigan (typically 6 months), none of these programs are available to you. Although you can still remain in the house, and can try to sell it via a short sale (with our help, at no charge or course), bailout programs will not apply to you.  Why?  Because you don’t own the house any longer – your lender does.
• Many lenders are offering their own programs, but they generally have tighter requirements than the proposed bailout options we’ve seen.

Our advice at this point? Well, it completely depends on your specific situation.  Call us, we’ll update you on what we know, and do what we can (never a fee) to get you back to better times as quickly as possible.

Finally, we’re naturally skeptical of the government just like you are, even in these times of change with a new administration coming into power in 2009.  We encourage you not to waste any time waiting for the government and hoping they have the end-all cure-all program to help.  As the above article points out, it’s a lot of money, but it’s not going to be enough to help everyone.  You need to look at all of your options.

Joel

Here’s an email I received last week. This story is typical for 85% of people that attempt a repayment plan of some sort.

I’ve looked over your website for a while. I went against your advice and tried the forbearance plan from my lender. I made my payments like they ask me to for 6 months hoping they’d keep their word and give me a loan modification. But after 6 months, and submitting tons of paper work again and there was always a reason why they could not do the loan mod.

I made my forbearance payments on time for 6 months thinking it would show on my credit report as paying on time so I could get a refi. Well guess what, they kept reporting me late so I have gotten nowhere while I’ve been paying $1565.00 a month (up from the $1,100 I couldn’t afford to begin with). Now they are foreclosing on me unless I give them even more money! I can’t sell because I owe way more than what the house is worth.

I’m at a point that I know I can’t afford this any more. Help!

Jack

And here was my response:

Jack, you don’t say who your lender is, but the statistics don’t lie. The reason only 15% of homeowners are successful with forbearance plans is because the payments are unreasonably high. You are in the minority in that you were able to go 6 months under a plan that added almost 50% to your payments. Congratulations – I’m impressed and your story will inspire many others!

Now however you are facing the next hurdle. Getting your lender to keep their word and do a loan modification. Those are very rare, and as you’ve seen, you need to jump through many hoops to get approved.

If you want to keep your house, I urge you to continue to persevere through this (ridiculous) process. You could try to refinance, but because you owe more than what your house is worth and because your lender continued to report late payments on your credit, this won’t be an option for you. By the way, all lenders continue to report late while you’re on a forbearance plan (or “payment plan”). It’s silly, but they figure that you’re still technically “behind” as you’re making up those back payments (as ridicules as that sounds, it’s the way they do things).

However, you seem to have come to a point (like most people in your situation) that you’ve realized you simply can’t afford your house any longer. That’s where we come in and can negotiate with your lender to get them to accept less than what you owe (a “short sale”) so you can start your life over and end this nightmare. If you’d like us to consider helping you (at no charge to you of course), give me a call so I can get more details to be sure your circumstances are a good fit.  Here’s how you can contact me (click here)

Emily

Ilyce Glink, a writer for Inman news published an excellent article yesterday supporting what we’ve been saying for years – that a Deed-In-Lieu of Foreclosure (“DIL”) is an absolute last resort for a seller.

In the article, she discusses how it’s almost impossible to get your lender to settle your account with a DIL.  How the DIL simply reduces the costs and time for your lender and puts you in a worse situation compared to a settled account with a short sale (our specialty).

Check out that article and let us know what you think.

Joel

One of the most common questions we get is: “My house is about to be sold at a Michigan foreclosure sheriff sale.  Do I have a chance of selling it before the end of the redemption period?”

Great question!

Of course there’s a chance it can sell! How big of a chance? That’s a big “depends” on at least…

1) When the sheriff sale is scheduled (even if it’s past, there’s still time – but you need to act quickly)

2) What you owe

3) What it’s worth (in this market)

4) Maybe you need a short sale (which of course we can take care of for you, at no charge, *IF* we decide to take your case on)

5) If you are able to stop your bank from drastically reducing the amount of time you have to sell it (we haven’t lost one yet)

6) ….

… and many other factors.

Emily (aka “Mom”) can discuss these with you. Of course you’d be much better off selling (even if you need a short sale [you lender taking less than owed]) as compared to doing nothing and having them come after you for the money they’ll end up losing.

We can help with all of this, and of course, there’s never a fee.

Joel

We talk to a lot of distressed homeowners who can not afford the payments on their house and think the bank has to do some kind of work out with them. The fact is that the bank does not have to work with you. You signed promise to pay (called a promissory note) when you bought the house promising to pay and if you can’t pay, you signed papers (called a mortgage) giving the bank permission to take the house.

Don’t fool yourself into thinking the bank does not have a right to your house if you have missed payments. Sure, the bank has to follow the appropriate legal procedures (called foreclosure) to get the house back. When they do, they get the house.

Try not to get mad at the bank for doing what they have a right to do. Instead, focus on what you can do to get your family back on track. Find a solution that will get you on the path to recovery fastest. Call Emily (aka Mom). She wants to work with you and help you figure out what your options are to get you back to better times.

Ann

Five months ago I talked to a homeowner that wanted to sell her house. She had lost her job, was fortunate to find another right away, but it only paid about 1/2 as what she used to make. She was a perfect candidate for a short sale.

It was never real clear to me why she decided to attempt a short sale herself since we never charge for this (we get paid by the buyer). I guess because it just sounds so simple: List your house with a Realtor®, get your lender to agree to take less than what’s owed.  Maybe she wanted to use her own Realtor® and we only use agents that are hand-picked and specially trained to work with our team.

But you know those car commercials that have the small print that says “professional driver, closed course”? Or “don’t try this at home”? You know, the standard disclaimers. Why those disclaimers? Because the professionals make it look so easy they don’t want you to get hurt trying it on your own.

Well you can probably guess what happened.  She called me yesterday trying to salvage her short sale.  To make a long story short, she had a buyer (which was the only good news), but the buyer wouldn’t pay what the bank wanted because the bank thought it was worth more.  This rarely happens on our cases (because we have our own “Bank Bully”).

The second thing wrong with the offer was her second mortgage wanted much more than the first mortgage would allow them to get.  This often happens with our cases, but because our buyers are cash buyers, by carefully working with both mortgage companies and the title company, this can also be eliminated.

Long story short, if she had brought us in early on, she’d be out from under this house and very likely would have thousands of dollars of debt forgiven.  As it stands now, unless she can raise $10,000 right away, she’ll have two mortgage companies after her for all of the money they will lose (likely over $40,000).

Unfortunately, it was much too late and too much had gone wrong for us to get involved to fix things for her.  The moral?  Keep the short sale business to the professionals who get 70-80% of their offers approved.  And of course “don’t try this at home”.

Joel

Sorry, it’s just not enough, and when you read the details of this article, you’ll see it’s really a lame effort on the part of these major lenders to do anything at all to make a dent in the foreclosure statistics.

Here are some of the “promises” they are making:

• “Inform homeowners within 45 days whether their application for a workout has been accepted or denied.” 45 days?!? By the time most people learn about a pending Michigan foreclosure sale, it’s only 3-4 weeks away!
• “Attempt to contact homeowners with subprime adjustable-rate mortgages (ARM) and other homeowners with ARMs that have a probable risk of default 120 days in advance of reset.” Attempt?!? They can’t even keep up the homeowners that are calling them on their own – how will they have time to initiate the contact and then do something about it?

Here’s the reality of how bad things are about to get (as discussed in that article): 2.2 million borrowers with subprime loans will face foreclosure proceedings between Oct. 1, 2008 and Sept. 30, 2011.

I hate to be all doom and gloom, but the simple facts show the HOPENOW guidelines fall well short of making an impact to help families keep their houses. It’s best to stay focused on the future and figuring out how to make steps to a brighter future vs. “hoping” your lender will give you a viable workout plan.

What does this all mean? Well, if you’re facing foreclosure on your Michigan house, you’re certainly not alone. Thankfully, at least we’ve got an excellent record with all of these lenders (and more) with getting them to short-cut this whole process and go directly to a short sale solution (let you sell it for less than what you owe).

Joel