Something so significant happened this week that I had to blog about it. It has to deal with Bankruptcies and how they relate to foreclosures. Specifically, a Chapter 7 (complete wipe out of debt).

Keep in mind, I’m not an attorney as I go through this.

I started working with two homeowners this week, each who thought their bankruptcies would prevent a foreclosure on their credit. Let’s start with the basics.

A Chapter 7 gives you the option of putting the house into the bankruptcy or not. Keeping it out means you’ll keep paying on the house and be able to keep the house. Both of these families decided to not keep the house (they were behind on payments and owed more than the house was worth – a typical scenario).

The job of the bankruptcy court is to sell all of your assets, take (most of) the proceeds and split it up between the people you owe money too – yes, this is simplified, but that’s the general idea behind it.

When you owe more than the house is worth, after filing the bankruptcy, one of two things are going to happen:

1) The bankruptcy court will look at what you owe on the house and what it’s worth. They’ll then conclude they won’t make any “proceeds” from the sale, and release the house from the bankruptcy.
2) The lender will petition the court to release the house from the bankruptcy. They’ll claim it’s worth less than what you owe, and they want it released so they can foreclose and cut their losses.

Either way, the house comes out of the bankruptcy and the lender completes the foreclosure process.

Here’s the problem: Most bankruptcy attorneys don’t tell their clients that at the end of all of this, they’ll have a bankruptcy and a foreclosure on their credit. Why is this important? Most people can get a home loan after a year or two out of bankruptcy (some lenders can do it immediately after – at a higher interest rate). The point is, though, with just a bankruptcy, you can be a homeowner again fairly quickly. But, with the foreclosure on their credit (which stays for 7+ years), buying a new home in the next 5 years is almost impossible.

Why don’t attorneys tell their clients this? Well, you can make your own opinion. Just ask yourself this, if you knew what I told you above about your credit and the foreclosure, would your bankruptcy attorney get any money from you? ‘Nuf said.

So, what do you do? If you’re considering bankruptcy, get our team involved before you file. We’’ll work with your bankruptcy attorney and we’ll develop a plan to stop the foreclosure from being placed on your credit. If you wait until 3 weeks before the foreclosure (like the two families I started working with this week), I can still try, but the chances of success are much less.  Don’t delay, call us today (hey, the rhymes!)

Joel

I don’t have a lot of time to BLOG today.  Ann and I just got back from another one of our Short Sale mastermind meetings.  Over 2 days in Cleveland.  We were hanging out with the country’s best short sale negotiations teams.  It was yet another excellent opportunity to learn from each other, get even better at what we do, so we can help more Michigan families who are facing foreclosure stop them dead in their tracks.  Some of what we picked up included:

• More “back door” numbers at some of the major lenders (Countywide aka Bank of America, Citi Financial, HSBC, Homecomings and more).
• Changes on how most lenders want to see their short sale packages presented to speed the process
• The top 5 secrets to get lenders to realize the true market value of houses in today’s’ market
• How to structure our 5-member team to become more efficient.

All of this information will allow us to more rapidly get short sales approved for you!  Call us and we’ll put our newly found knowledge to work for you today!

Joel

Here’s the headline announcing it from last week.

It’s about time!  But most experts believe it will have little impact.  According to this article, even Detroit Democrat Senator Hansen Clarke says “It’s too little, too late. I feel it gives false hope to people already in foreclosure.” And according to that same article, Clarke says the new legislation may speed up the foreclosure process because the timelines could be triggered more easily under the new legislation, forcing homeowners into a foreclosure crisis sooner than they currently face.

Here are some of the highlights and what it means to you:

1) The law takes affect 45 days after she signed it (signed 5/21/09 so it takes affect 7/5/09).  Prior to July 5th, you don’t get the law’s benefits.  If your lender forecloses prior to 7/5/09, it’s too late for this help.

Even after 7/5/09, if your lender forecloses (and you are in the “redemption period”), just as always, your only work out option is a short sale (if you owe more than the house is worth).  Why is this? During redemption period (that time after the foreclosure and before your lender kicks you out of the house), your mortgage is gone; there are no modifications available because there is nothing to modify.

2) Must go to financial counseling within 14 days of getting the new required notice from your lender.  This new notice will be sent to you within 7 days of the foreclosure notice being sent.  Jeez, counseling? How embarrassing is that?  Will you be able to get the counseling even if you want it? Carrie Guzman, financial justice director of ACORN says “Housing counselors are already overloaded”.  I know counselors near me are typically booked 7-14 days out.  But if you miss that 14-day deadline, you’re out of luck and the foreclosure will be taking place within 4-5 weeks after that.  Wow!

3) If you qualify and your bank doesn’t work on a loan modification (they have 90 days to consider a modification), your bank must do judicial foreclosure.  This means they will take you to court (more public embarrassment),  How many will qualify for a loan modification?  20%, 10%, most experts believe less than 3% as that is the current rate.

4) To make matters worse, according to this article, the new law requires your property address to be published in a local paper – increasing the chances of getting harassing letters and phone calls from potential scam artists.

Overall, you can tell I’m not thrilled with this new legislation as it indeed seem too little too late, will likely help few families, and will make the entire foreclosure process even more public and embarrassing.

Joel

I’m up early today since it’s the Big Move Day.  We’ve outgrown our current office and are moving into a place just down the road that has much more space.  We’ve simply ran out of room in our current office and have no room for our newest team member Holly.  I’ll get information up on the blog about Holly within a couple of weeks.

During these tough economical times with house values falling and people losing their jobs, short sales have become the most popular choice for sellers and lenders alike.  Over the last 6 months we’ve had to almost double our staff to keep up with the increased demand so we can help more families like you.

So today we get to finish packing all the boxes, move our computers and phone systems (but we’re still set up to take calls all day) and then unpack.  Of course we’ll have the long weekend to work out any bugs.

Next week we’ll be up and running at our new location and our newest teammate!

Joel

Within the last week, we closed on two different houses and my team made $283,000 of debt disappear between both of them. How is this done? This is done with a short sale. Don’t know what a short sale is? Well you can search this blog to learn more, or just give us a call. We’re really good at them though, based on all of the testimonials you’ll find here and here. Oh, and here’s two more!

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“… they were great dealing with the mortgage companies and getting us out of the debt that …”

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John & Kris, Grand Rapids, Michigan

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Since I have received a letter from Great Lakes Home Solutions, Inc., my life has changed dramatically.  My house was in foreclosure and the sale date was only a few weeks away.  After talking to a few associates from Great Lakes Home Solutions, Inc, they had not only stopped the foreclosure, but helped negotiate a short sale with the mortgage companies.  I owed over $150,000 at the time and they negotiated a sale with the mortgage companies for only $52,000, which is over $98,000 debt wiped-out.  Furthermore, their team worked with my REALTOR to find a buyer and went to the closing because I could not be there since I was over 300 miles away.  I did all the necessary paperwork by email and mail.  I will definitely recommend Great Lakes home Solutions, Inc to everyone I know.

Craig, Portage, Michigan

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Joel

Last week, we closed on two different houses and my team made $176,000 of debt disappear between both of them. How is this done? This is done with a short sale. Don’t know what a short sale is? Well you can search this blog to learn more, or just give us a call. We’re really good at them though based on all of the testimonials you’ll find here and here. And here’s two more!

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“After falling upon hard times such as loss of income, bankruptcy, adjustable rate mortgage and increased family size, we were unable to afford our house payment. We tried multiple times to work with our mortgage company and tried to refinance with other lenders to no avail. We were facing foreclosure. We researched our options and found Great Lakes Home Solutions Inc. online. Emily, Joel and Dan worked wonders for us. Our original mortgage was for $138K. Our mortgage company was able to settle for $45K. Our total debt wiped clean was $93K. We now have a fresh start thanks to Great Lakes Home Solutions in. Thank you so very much.”

Shannon & Nicole, Lowell, Michigan

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“Great Lakes Home Solutions Inc. was very open and honest and transparent with our situation from start to finish of going through foreclosure and its proceedings.  We approached them in a time of need and they answered the call and more!  They kept the process simple, communicated what we had to do and helped us realize we were not alone and able to help make a way out of our situation with our house.  Our original debt on the house after a previous refi. was at $168,000 for our ranch 3 bedroom home.  Great Lakes Home Solutions Inc. was able to take on the mortgage company and negotiate a short sale that allowed the company to find buyers and for us to walk away from this house with $83,000 in debt wiped out and allow us a way to find a new place to live and get our credit report to a better place.  Thanks to the Great Lakes Home Solutions Team!

Erik & Dawn, Vicksburg, Michigan

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Joel

I read this article last week which seems to really reflect on what homeowners are discovering these days:  “False Hope For Homeowners”

It discusses how all of the government programs introduced so far to “help” homeowners have helped very few.  And how all they’ve really succeeded at doing so far is create false hopes and expectations.  There simply isn’t enough money or push behind these programs to make a significant difference (especially with families facing a Michigan foreclosure).

Check it out and share your thoughts.

Joel

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.

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“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

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“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

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Joel

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

Within the last week, we closed on two different houses and my team made $195,000 of debt disappear between both of them. How is this done? This is done with a short sale. Don’t know what a short sale is? Well you can search this blog to learn more, or just give us a call. We’re really good at them though, based on all of the testimonials you’ll find here and here. Oh, and here’s two more!

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“… my life has been turned around – they helped me get a new lease on life…”

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Robert, Holland, Michigan

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We appreciated all the work Great Lakes Home Solutions did on our behalf. We were trying to work with our bank, but couldn’t get through all the bureaucracy of the bank. Great Lakes Home Solutions was able to keep working with the bank to find someone who could make a decision. The original loan was for $140,000 which we could never have sold the house for. Great Lakes Home Solutions and Erin Cramer (Realtor) found a buyer for our home. The bank netted $58,400. Our total debt wiped out was over $81,000. Thank you so much.”

Jeff and Tammy, Kalamazoo, Michigan

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Joel