Stop Michigan Foreclosure

As 2009 came to an end and 2010 begins to roll in, many people are thinking back on the last 12 months and making new year’s resolutions – changes they’d like in make in the following year. While it’s always a good thing to be striving for self-improvement in any area of your life, often these resolutions are difficult to stick to, whether it be a goal to lose weight, eat healthier, or work harder for a promotion.

I like to think of the self-improvement goals I make as reaffirmations or renewals, instead of resolutions. Each year I strive to recommit to personal and professional goals – most of which are ongoing. For example, I may reaffirm my commitment to being a better friend, partner, employee, or to focus on improving my health and giving back to my community.

This year I’d like to share my professional reaffirmations. I’m recommitting to all of our sellers in foreclosure to do all I can – to exhaust all options – in helping them out of their situation. I’m recommitting to all of our REALTORS to do my part in keeping them informed and doing all I can to help each transaction go smoothly. In short, I’m reaffirming my commitment to you to help get you back to better times, whatever that may entail.

I’m looking forward to new challenges and opportunities in the next year, and I wish all of you a happy, safe, and fulfilling 2010.

Melissa

This week we got an email from “Jeff”. Our team was negotiating a short sale for Jeff when his financial situation changed for the better. He decided to attempt a loan modification with his lenders and cancel the short sale (despite the 6% success rate).

Jeff had been having some trouble getting through to someone who could help him or tell him anything definite about his options, so he decided to contact us in the hopes that we could help point in him the right direction.

I was able to quickly tell him which department to call and what to tell that department when he did call. After he’d tried the number I gave him, his email back to me read, “I don’t know how you guys can handle talking to banks day in and day out. I get so frustrated, mainly because I get absolutely nowhere when I call. And this was after you gave me the right number to call and told me exactly what to say! You guys must have the patience of saints…”

I’ve never thought of myself as particularly saintly, but I got to thinking about what he’d written. Many lenders are so huge and have so many departments that navigating through the maze of their phone system is difficult for me, and I’ve been doing this for three and a half years! I can’t even imagine what it must be like to have to figure that out as a first time caller.

If you find yourself needing a short sale and don’t have the patience of a saint, give us a call, and let us handle the navigation of your lender’s phone system…and the short sale for you.

Melissa

From the REALTORS® we work with to the sellers we help, all seem to want to know if we take on their case and negotiate their short sale, whether or not they’ll owe a deficiency.

Of course, we can’t guarantee (no one can) that your lender(s) will agree to settle the accounts.  That is, not ask for any further payments.  Some lenders ask without fail while others will never ask.  What we can guarantee is that we will exhaust our resources and knowledge to prevent you from having to pay anything more; we want you to be able to walk away owing nothing.

Unfortunately that doesn’t always happen.

But the good news is a deficiency (usually what’s called a “promissory note”) can actually be a positive thing.  Chances are good that if you need a short sale, you are behind on your payments, and that’s had a bad effect on your credit.

A promissory note is an extended, low interest or interest-free, unsecured loan.  It is an excellent and easy way to repair your damaged credit.  Also if you find yourself facing another financial hardship and not able to make payments, there is no collateral on the loan.  This means there is no property – houses, cars, boats – on which the lender can foreclose or repossess.

We work hard to keep you out of these situations, although at times it may be unavoidable.  If you have any questions about short sales or deficiencies or promissory notes, feel free to give us a call – we’d be glad to answer any questions or find a way to help you.

Melissa

Recently, there was an article on a popular website that postulated there are 10 cities in the US which are experiencing housing price rebounds. I’m not an expert on the national real estate climate, and I can’t speak to the state of other markets, but here in Michigan, I can safely say that housing prices are not rising.

The author of the article theorized that when prices hit their lowest, the only place they can go is up. I understand his point completely, but I would argue there is an alternative: stagnancy.

Due to the vast amount of variable rate mortgages and bad loans written in the last decade, coupled with the recession, people are still losing houses to Michigan foreclosures. This means that there are a lot of bank-owned properties priced low to sell quickly. This is affecting and lowering property values in all types of neighborhoods and areas.

The good news is that houses are still being purchased, due to low interest rates and first time home buyer tax credits. These are positives, but the negatives remain, and probably will continue to do so for several years.

Property values are low, and many people owe more than the house is actually worth. For some people, it’s an inconvenience if they can still afford to make their payments, and it is always advised that they do so. For those who cannot make their payments, there’s a lot of information on this website about the options available; or you may give us a call.

Melissa

The other day I was on the phone, making my daily call to one of the biggest lenders in the country, when the conversation I was having took an unusual turn (after 37 minutes on hold of course). The Customer Service Rep who was helping me – I’ll call her “Jane” – was doing her best to answer my questions about a short sale we were negotiating on an FHA loan. She began to ask me questions about the various programs and options available. This isn’t unusual as I spend a lot of time educating the people at the banks about various options/programs available. She eventually revealed to me that she herself had an FHA loan on her house…and that she was over three months behind on her payments. Yikes!

I was shocked to hear that Jane, who worked for a major lender, had so little idea where to turn for help on her own house! She told me she had been approach by a company in her state that had offered their (somewhat ambiguous) services for a fee…of $3,200 upfront. To me, this begs the question: if a person is nearly four months behind on their mortgage payment, how is this person supposed to come up with $3,200?

I suggested, instead of agreeing to fork over several thousand dollars to this company, that since she had an FHA loan, she contact the Department of Housing and Urban Development (HUD).. I told Jane they would be able to either assist her themselves, or direct her to a business or non-profit organization in her area that would not charge her an upfront fee. I even gave her the number for HUD. Jane thanked me profusely and told me she had no idea there were people out there who wouldn’t charge her to help her.

If you are facing a Michigan foreclosure, don’t let someone tell you that assistance costs $3,200. It doesn’t (and it never will cost a dime with us). Learn your options! This blog and our website are full of information and suggestions. You can also call us anytime.

Melissa

There’s been a lot in the press lately about banks accepting short sales but still requiring all or part of the balance to be paid by the seller. Let’s talk about that and what we do to help avoid that from happening.

When a short sale has been negotiated and approved, there will always be a difference between the amount approved by the bank to release the lien against the property, and the principal balance that was originally owed. Most of the time, that amount, called the “deficiency”, will either be charged off by the bank and they will issue a 1099 IRS form showing the deficiency as income to the seller. Usually, a good accountant will be able to balance that amount out at the end of the year, so that the seller ends up paying nothing out of pocket. This scenario is, of course, ideal.

However, in certain circumstances – usually in the case of a second mortgage – the seller may be asked to sign a promissory note for the deficiency. The amount on the note may be the balance due minus the fee paid to release the lien (which is usually $1,000-$5,000), it may be a percentage of the balance, or it may just be an amount determined by the bank based on your assets, income & expenses.

The way we structure our cases here at Great Lakes Home Solutions, Inc. allows us to negotiate with the bank to have the account in question “settled” (almost all the time). Settled means that there is no amount due from the seller at closing and no promissory note to be paid by the seller in the form of installments for a specified length of time. We exhaust every resource and explore each alternative to avoid this type of situation, which allows the seller to start fresh with a clean slate.

This is more of a complex topic regarding short sales. For further explanation, give us a call and we will answer all of your questions so you can make the best choice. Bottom line is of course the alternative of a Michigan foreclosure is going to be much worse.

See my next article to find out more about what happens when a note is unavoidable.

Melissa

You may have been hearing a lot about the new Michigan foreclosure “lifeline law”, and you may be wondering, what does it really mean?

Currently, Michigan is sixth in the nation for foreclosures; clearly something needed to change. But is this new legislation really the answer?

If you’ve missed a few mortgage payments recently, your lender may have started the foreclosure process. What this now means is that you should receive two letters notifying you of your right to delay the foreclosure 90 days by working with a housing counselor. However, you must contact a counseling agency within 14 days or your rights will be waived.

Should you choose to meet with a counselor, you will need to have income information, including your 2008 tax return and year-to-date proof of your income. Each lender or investor will have their own guidelines which will apply to your mortgage. However, even if you qualify for a loan modification (less than 5% of applicants do, so don’t hold your breath), your lender may choose not to agree to the proposed modification. This means that they may continue the foreclosure proceedings.

If this situation applies to you, it is imperative for you to know your options and to act immediately. To find a lender-approved counselor, you may contact the Michigan State Housing Development Authority at 866-946-7432, or the “Hope Hotline” at 888-995-HOPE.

If you have been turned down for a loan modification and feel you have no other options, a short sale may be right for you. Of course short sales are our specialty and are certainly much better than a Michigan foreclosure. The catch of course is that if we don’t start soon enough, it may be too late, so call as as soon as you are out of options.

Melissa

Often, when homeowners find themselves in financial hardships, they may look first to housing counseling agencies or mortgage brokers to formulate a workout plan or renegotiate the terms or their loan (as well they should turn there first). But because of the large number of families in similar situations, these alternatives have become flooded with requests.

In response, more private mortgage insurance (PMI) companies have begun offering programs to keep their clients out of foreclosure. Obtainment of private mortgage insurance (not to be confused with homeowner’s insurance) is a requirement on every loan on which there has been less than 20% down payment. The policies are in place to protect the lender if the homeowner stops making payments. Some PMI companies have begun to reach out to homeowners in order to assist in avoiding foreclosure; however, there are often stringent requirements to qualify for the programs being offered.

For example, one program offers to cover delinquent payments with an interest-free loan but requires the applicant to prove the delinquency is temporary and requires the regular monthly mortgage payments continue to be made. Another program is only available to homeowners who have owned their house for fewer than three years.

It’s no wonder far less than 10% of workouts are approved with these strict criteria.

If you are in default or financial hardship, rest assured, you’re not alone, especially if you are facing a Michigan foreclosure. You have only to turn on your television or radio to hear about the many others in similar circumstances, but let me encourage you to research the information out there for yourself to find out what options are available to you because no one else besides you can really choose which option will suit your unique situation.

Of course Emil (“Mom”) is always available to you at no charge to help you narrow your options on focus you on solutions with the best chance of working. Give her a call today.

Melissa

In recent months, we’ve all watched the rise in commercial and residential foreclosures. The laws regarding publication of properties scheduled for sheriff’s sale formerly only required the legal description of the property. The common, or street address is much more difficult to acquire. A few weeks ago, Governor Granholm signed into law the Home Foreclosure Prevention Act, which goes into effect July 5th, 2009 and requires lenders to publish the common address and name of the individual facing foreclosure.

While this requirement may have been designed to help families be made aware of their rights about foreclosure, it also makes more personal information available. This could increase accessibility for scam artists or companies that fraudulently claim to help families out of foreclosure. If you are in a foreclosure or pre-foreclosure situation, please take the time to research your options and find out for yourself what possibilities an individual or company may actually be able to offer you. As someone who has been in this field for over three years, I can assure you I have seen many different instances in which unethical persons have taken advantage of unsuspecting families. I encourage you to be cautious during these times; after all, forewarned is forearmed.

Melissa

As I’m writing this blog, I’m on hold with one of the lenders so I can continue my short sale negotiation for a family we are working with (both the husband and wife lost their job within 2 weeks). It occurred to me that most people like you don’t have either the time or the patience, between work, kids, and home life, to deal with their lenders.

Whether you’re trying to modify the terms of your loans, do a refinance, negotiate a short sale or discuss their options for a workout when you find yourself behind on their payments facing a Michigan foreclosure. Hold times routinely surpass 15 or 20 minutes. Navigating through the maze of various Customer Service, Collections, and Mortgage Servicing departments can be time-consuming, frustrating, and impractical for almost everyone!

Here’s the good news, though: that’s what our team does. We keep up-to-date, exhaustive records of phone, fax, and email information to streamline our time spent in contact with lenders, yet there are still many times that we end up on a lender phone call for 45-60 minutes. This is the nature of the business, the way the lenders systems are structured (very poorly I might add). If you’ve tried talking to your lender and have had trouble negotiating a short sale with them, let me tell you, I feel your pain. If you’re at the end of your rope with your lender or would prefer not even to start the climb on your own, give Emily (“Mom”) a call, and let us do what we do best.

Melissa