Stop Michigan Foreclosure

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

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

As the real estate market declines with the rest of the economy, more and more families like yours find themselves facing foreclosure. The Michigan foreclosure process is a very complex and expensive process for lenders; in an attempt to stem of the flow of funds lost during foreclosure, many lenders say they are offering solutions, usually in the form of a loan modification or a plan to repay the amount past due (in arrears).

I just wanted to take a moment to talk a little bit about repayment plans. Often the plans offered by lenders require a considerable amount of money due immediately (we’re talking thousands of dollars). Most homeowners find themselves in a default situation because of a financial hardship, resulting in a loss of liquid assets, or cash on hand. This makes a large initial payment all but impossible.

Also, most repayment plans consist of fractionalizing the amount in arrears, and adding that smaller amount onto the monthly payments. For example, if a your mortgage payment is $1000/month, and your are two months behind, the amount in arrears would be $2000, plus any penalties or late fees. A lender may then offer a repayment plan that requires $200 down initially, adding $200 to the payments for the next nine months, making those payments now $1200.

If you are in a temporary financial hardship, this may be a viable solution. However, if you find yourself in an ongoing hardship, this option is likely not be feasible.

If you find yourself in a similar situation, give us a call to discuss what your other options may be at this point to get you back to better times as fast as possible.

Melissa

Since this is the first blog I’m writing, I thought I’d just take a second to introduce myself and talk a little bit about my first impressions of my new team. I’ve been negotiating short sales since 2006, so I guess you might say I feel like I’ve seen/heard it all. I just recently joined the Great Lakes team, and I’m really excited about the vision the team possesses and the potential I see in the company.

I can definitely see a genuine concern and regard for the clients with whom we are currently working and the associates with whom we come into contact. I’ve seen people from many walks of life in many different situations throughout the last few years, and I can assure you that, as a client facing a Michigan foreclosure, you will be informed, your information kept confidential, and above all, that you will be respected. We’ll always be doing our best to get you back to better times as fast as possible.  Click on my name below and check out my short video introduction.

Melissa

We have a new team member that we are excited to introduce to you! Melissa “Bank Bully” Arp. You’ve probably noticed that we added her to our team photo a couple weeks ago.

Why do most short sales fail? One of the main reasons is lack of persistent, consistent follow up with your lender. This is where Melissa excels. Melissa joins our team with over two years experience negotiating short sales and is a great complement to Joel (our “Closer” and “Fix It” guy).

With this one-two punch, lenders won’t have a chance, and your chance of a successful short sale will go up dramatically.

Meet Melissa and learn more about what she brings to our team by watching this video.

Stay tuned to her “insider’s insight” she’ll be sharing in future BLOG entries.

Joel