Stop Michigan Foreclosure

Over the weekend (yes, I do work on weekends), I spoke with a gal in Battle Creek who was in need of a major “Financial Reality Check”.

She had fallen 6 months behind on her mortgage because of health issues (couldn’t work), but is now back to work. The problem is that the foreclosure sale is 14 days away and she needed about $6,000 to reinstate the loan.

(“Reinstate” means to bring the loan current and pick right back up where you were).

After talking for a few minutes she told me she really couldn’t afford her regular $600 payments, even if she reinstated it. Despite this realization, she decided to take a $6,000 hardship withdrawal from her 401(k) to save her house.

Here’s the problem as I see it: She can’t afford $600/mo and because of the late payments on her credit, she knows she won’t be able to refinance for at least 2 full years. She’ll end up in the exact same position in a matter of months (facing another foreclosure). Only at that point, she’ll have taken a major hit on her 401(k), which is supposed to be there for retirement – yikes!

She’s having a hard time giving up her house, even though deep down, she knows she can’t afford it. Why? Well, heck, it’s been her home for 36 years!

I can understand this; I just hope for her sake she quickly gives herself a financial reality check and walks away. Otherwise, she’ll be making her situation much, much worse.

Emily

Many families are struggling with this question when facing a Michigan foreclosure. Remember, I’m not an attorney, so I can’t advise you which is best for you and your family.

I have ask a simple question to help you decide on your own what direction to start in:

“If it weren’t for the foreclosure, would you still consider the bankruptcy?”

More often than not the answer will be “well, no”.

I suggest you consider trying to sell the house on a short sale. If we’re all successful with working with you on this, and we stop the foreclosure and save you from putting a bankruptcy on your credit, why not give it a try? Also consider that filing for bankruptcy could cost you thousands of dollars while working a short sale with us won’t cost you a dime.

If you are seriously considering a bankruptcy, before meeting with a bankruptcy attorney, be sure to write out these questions and ask them all at your first meeting.

Give me a call and I’d be glad to discuss your options with you!

Emily

I often have sellers ask me if they can purchase the house back from the buyer after a short sale. I really wish you could, but unfortunately, you can’t.

One of the stipulations from your lender is that you can’t benefit from the short sale. Staying in the house after a short sale, regardless of who buys it, would constitute a benefit to you. Whether through a land contract, lease/option or lease – we don’t want you committing loan fraud by going against your lenders short sale requirements.

There are plenty of other benefits from the short sale that you can receive: saving your credit from a Michigan foreclosure and keeping the mortgage company from coming after you for the foreclosure deficiency are the two biggest ones.

If you want to find out if it your best option, give me a call. You can reach me at 269-685-5921.

Emily

… 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

OK, I’m getting a little frustrated. I coach a lot of people on how to deal with their lender to enable to keep their house. Yes, we charge nothing for this, so I get to vent a little so I’ll share my frustrations.

When you’re talking to these guys (the lenders) you’ve got to realize that you’re negotiating to keep your home! Act like it – be passionate! Keep bugging them until you get a commitment, or keep asking for a supervisor (or their boss, and their boss) until you find someone that will work with you to keep your home.

Remember, it’s just a job to these people, and if they want to leave at 5pm (or mail you a package), most will leave and lose your stuff by the next day. You need to take charge – period!

I’ll let you know what’s reasonable for the lenders to expect (as for as $$, paperwork, etc.) – you’ve simply got to keep following up. Do NOT sit around waiting for them to call you back, or waiting for mail or a fax. Actually, NEVER let them mail anything – it takes way too long. Have them fax it. Don’t have a fax? Someone that you know has one, or bite the bullet and have them send it to Kinko’s. Each day (and hour) that ticks by brings you that much closer to losing your house – take control!

Some people are upset with me because I won’t jump on the phone and negotiate for them (on occasions I have). Here’s my theory, if you’re passionate, you’ll do a much better job than I will because I’ll coach you. Some families have hired firms to negotiate for them. What a waste of money – don’t bother. They seldom are more success than you can be, plus, even if they offer your money back if they fail, everyone I’ve talk to that has tried them can not get their money back.

OK, I think I’m done venting now.

Emily

…..the tough get going!

“Foreclosure” is a scary word, especially if you’re not aware of the impact it can have on your life in the future. Having foreclosure on your credit history can and WILL prevent you from getting any kind of loan for years to come! It is of the utmost importance to you and your family that you avoid a Michigan foreclosure at all costs.

Every week we mail letters to people going into foreclosure througout Michigan. Every week they call us to see if we can help them. It’s frustrating for us to realize that most of the people we write to won’t respond, either because they feel they have no choice in the matter, they’ve given up or they think the letters are a scam of some kind. Don’t give up; you DO have choices. The letters are no scam; they are a glimmer of hope for your future, an invitation to find out if we can help you, at no cost to you, EVER! We urge you to be tough, fight this unfortunate situation. Call us to see what can be done to protect your future.

Emily

Last week I was talking with a seller who was facing a Michigan foreclosure about his options. His situation was a lot different from 99% of the families I as he has a bit of equity in his home. Trust me, in Michigan, this hardly ever is the case.

He currently has it listed with a Realtor® for almost $50,000 more than he owes on it. As his foreclosure date gets closer and closer, he wasn’t sure what to do.

My suggestion to him was to lower his price drastically (he’s had almost no showings). I figured it was better that he only receive five or ten thousand dollars out of his equity than give it all to the bank in a foreclosure.  Wouldn’t you agree?

As we were finishing up the conversation, he asked me “so what are you trying to sell me”. I simply replied that I wasn’t here to sell him anything and that my job is to help him figure out what’s best for his situation. He thanked me for my time and said it was refreshing to talk with someone who was interested in helping him.

I don’t tell you this to pat myself on the back. Only to remind you that I’m here to help you with your specific situation. There’s not a one size fits all solution that I can type up and leave for you to read. If you want to know what’s going to be best for you, give me a call because I need to have a “real live” conversation with you, get your details, discover your needs and wants, and come up with a solution with you. Contact me today.

Emily

At first glance, modifying your current mortgage seems like a quick and easy fix for your current financial problems and avoiding a Michigan foreclosure. Unfortunately, as you can read in this article it’s not as easy as you would think.

There are a number of factors that play into modifying your mortgage. The number one show-stopper that I hear from homeowners who have tried a loan modification and have turned down is their lack of income. While it may seem that more and more mortgage companies are willing to modify mortgages, they’re still not going to help you out if you don’t have sufficient income.  Plus, as previously reported, nearly six out of ten troubled borrowers who are able to negotiate loan modifications re-default after eight months.

If you can’t make your mortgage payments and feel like there is no way out of your situation, call me immediately. You do have a choice.

Emily

Here’s one of those good news/bad news things for you today.

Since 10/1/08, homeowners in a danger of facing a foreclosure have had a new option call “H4H” (Hope For Homeowners).  In a nutshell, FHA government-backed loans loans were made available to families facing foreclosure.

Recently, FHA expanded this program to make even more families eligible.  That’s the good news!

The bad news is, well, you’re in Michigan.  One of the strict criteria of refinancing into this program has to do with the value of your house compared to the debt.  When you refinance, there needs to be some equity there.  That means that the appraised value is going to need to be about 6% more than what you owe on the house.

For example, if you owe $150,000, it needs to appraise for about $159,000.  Why?  FHA wants 3.5% equity after the refinance, plus you’ll need the remaining (about 2.5%) amount to cover the costs of the refinance.

Why is this bad news for most families in Michigan?  Why will most homeowners facing a Michigan foreclosure be unable to qualify for this program? Because most houses have decreased in value substantially over the last 3-5 years.  So if you owe $150,000, and purchased or refinanced within the last 5 years, the chances of getting that $159,000 appraisal are pretty small.

I don’t like to be the bearer of bad news.  If you’ve talked to me, you know I like to keep you focused on the positive future that’s ahead of you.  But you need to understand that putting your time and energy into a program that’s unlikely to work is not good for you.  It can lead to tearing your family apart!  You need to focus on solutions that have the best chance of success.  And of course, I can help you with that (never a fee) – but, you need to call me.

Emily