Refinance In Foreclosure

 

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Tristan Hunt asked:

People across America are increasingly being faced with a homeowner’s worst nightmare: Foreclosure. The possibility of losing your home to the bank is very real, and it’s very normal to be scared and confused as the process moves along. What’s important is to keep a cool head, don’t panic, and evaluate your options as early in the process as possible. Many people who are approaching or are currently in a foreclosure do not realize that they may be qualified to refinance while in foreclosure and save their home, mainly because by this point in the process they have experienced rejection and denial by their own lender and often several others. But if you have Equity in your home, you can refinance in foreclosure and get back on track to improving your credit.

Refinancing in foreclosure is not like normal refinancing. When you apply for a regular, or conventional mortgage refinance, the most important thing a lender looks at when deciding whether or not to approve the loan is your credit and mortgage payment history. If you have not been more than 90 days late or behind on your mortgage payments, and your FICO credit score is above 500, conventional lenders will look at your refinance application and consider it. They may not approve it, but you’ll at least get looked at. When you go beyond 90 days late on your mortgage payments, no conventional lender will review your application, no matter how much money you make or how much better your situation is now than when you fell behind. Once you are considered 120 days late or behind on the mortgage, or your credit score falls below 500, the conventional lending industry simply cannot take the risks of lending to you anymore. If you’ve been rejected for a loan during the foreclosure process, even before the notice of default was recorded, it is usually because you are over 90 to 120 days late or your credit score is under 500, or both.

You are now in a special situation, and banks don’t like “special”. They just aren’t set up for “outside the box” financing, no matter how much sense it makes, so their response is to either deny your application, or in the case of the lender who holds the mortgage on your home which has fallen behind, they do the only thing they can, foreclose on the home and force its sale at auction to the highest bidder.

In order to handle special situations like this, you need a lender who specializes in refinancing foreclosures. There are only a few out there, but you’ll know one when you find one, because the first question they will ask you is “If you had to sell your home quickly, how much would it sell for?”, followed quickly by “And how much do you owe on your first mortgage”. This is because they are trying to establish how much Equity you have in the property. Equity for these purposes can be calculated easily:

A) Just subtract the Balance of your first mortgage from the Value of your home.

B) Take that Number and divide it by your property Value (there’s that word again),

C) Multiply by 100 and you’ve got your gross Equity percentage.

Because your credit and mortgage history cannot be considered for the purpose of qualifying you for a foreclosure loan, foreclosure refinancing is all about Equity. Lenders specializing in foreclosure refinancing will routinely request that you order an appraisal and an additional appraisal review performed by a realtor, commonly referred to as a BPO or Broker Price Opinion.

Here’s a general guideline: If you have 35% or more Equity in your property, and your property is Valued at $200,000 or more, you are probably qualified for a foreclosure refinance, and you can save your home from the auction block if you act quickly. Again, this is a rule of thumb. Sometimes, you may be able to get away with having a little bit less Equity, or a little bit less Value, and in some states you will need much more Equity and a much higher Value to qualify for a refinance in a foreclosure scenario.

If you have two mortgages, a first and second, you still may be eligible for a foreclosure refinance if you meet one or more of the following conditions:

1. The Balances of your 1st and 2nd mortgages added together amounts to less than 70% of the Value of your home.

2. Your 2nd mortgage can be “subordinated”, or kept in place while you refinance the 1st mortgage.

I can’t emphasize enough the importance of acting as quickly as possible to save your home through a foreclosure refinance. The foreclosure clock starts ticking from the day on which you receive a notice of default or on which you become 120 days past due on your mortgage payments, and it can move very quickly. While most foreclosures don’t get to the stage of a property auction, sherrif’s sale or trustee sale in which you will lose your home until about 120 days from the recording of the NOD ( Notice Of Default ), in many states this can happen much more quickly, as fast as 60 days. While you delay, your mortgage company’s payoff balance, the mount required to cure the default and prevent foreclosure, will increase as legal fees and interest pile up, eating away at your Equity and robbing you of the ability to refinance out of the foreclosure. It’s easy to feel lost, almost paralyzed by the shock and fear of losing your home, but if you are serious about saving your home from foreclosure, get on the phone and find a foreclosure refinancing specialist as quickly as possible.

Don’t forget, your first priority is to save your home, and a foreclosure refinance is considered a short term loan, usually with a fixed rate for 2 or 3 years. This gives you enough time to get your credit back together and refinance at the end of the fixed period into a much lower payment. Because you have shown your current lender, as well as the credit reporting agencies and by association every other lender in the country that you could not make the mortgage payments in accordance with the terms of the loan which is in foreclosure, it’s understandable that the lender providing the foreclosure refinance is taking a substantial risk in lending you the money to prevent the foreclosure, and the financing will not be at a very low rate. However, in most cases, the foreclosure refinance loan’s payments are Interest Only, and will be lower than the payments on most forbearance, or payment agreements, which your lender may have proposed or enrolled you in prior to filing for foreclosure. And if you consolidate high interest debts like credit cards and personal loans, payoff judgments, and clear away liens, you can potentially free up a lot of cash flow from your monthly budget and begin improving your credit score with a clean slate.

Don’t waste time talking to lenders and brokers who don’t know the foreclosure refinance process inside out, there are simply too many out there who will just waste your time and money trying to learn how to get your foreclosure refinanced while you slide closer and closer to a sale date and the real possibility of losing your home. On the other hand, the right lender can help you lay out other options to save the equity in your home even if you don’t qualify for a foreclosure refinance. Find a special lender for your special situation, and you will have a fighting chance of refinancing in foreclosure and saving your home.

foreclosure refinance

Published on 22 Jan 2009 in Refinance Mortgage in Foreclosure, by

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How to Stop Foreclosure - What You Can Do to Help Yourself?

Brian Higdon asked:

If you are behind on your house payments or if you already find yourself in foreclosure, there are some steps you can take to stop or at least slow the process. The first thing to know in how to stop foreclosure is what you can do to help yourself. There are a number of ways that you can help yourself to stop the foreclosure of your home and gain a greater financial security. The threat of losing your home is something that can have an adverse effect on every aspect of your life.

The first thing to do is take the time to rid yourself of stress and frustration. These two things will prevent you from seeing options that may be open to you but not obviously in front of you. Once you have done that take a calm look at your entire situation.

Steps To Take In How To Stop Foreclosure

The first thing to do is find out how much money you need every month to make your payments on your property as well as on all of your other living expenses.  Look at your utility bills, your car expenses, food, etc. Add all that up. Next add in your mortgage payment, your taxes and insurance. Once you know how much you will need to pay every month, you can move on to the second step.  

The second step in how to stop foreclosure is to see where you can cut back on the expenses you determined from step one.. If you have the time, save up all the receipts for several months. This will give you a good idea of where your money is going. Separate all of these into different categories and write out the amounts.

Bills, food, work or transportation, insurances, and extras, should cover the basics. Then break it down. Extras are things that you purchase but do not really need. Things like cable TV, the extra satellite TV packages, the gym memberships or subscriptions to websites. All of these can be cut out for a few months while you get everything back in order.

Once you have cut these expenses consider cutting back on things like electricity and phone usage if you have a computer and a decent internet connection you can cut long distance expenses completely with a variety of online programs that allow you to make phone calls for less then what you pay for long distance service. Cut extras like call waiting and caller ID.

Car pool to work or to the grocery store with friends, family or a friendly neighbor, this can help with expenses. You can also do things like cut back on name brand buying in the store. Store brands are usually just as good and a better deal. These are just some of the ways you can help yourself if you are asking the question how to stop foreclosure.

 

Once you have an idea of where your money comes from and goes to, consider getting a second job, third job or more. Sell some of the stuff that is stacking up in your closets or maybe in storage.  Can your spouse start working?  Working a second job?  Can you find cheaper or free child care?  When you need to stop foreclosure, you really need to become creative in finding ways to cut your spending and increase your income.

In Foreclosure Need to Refinance

Published on 22 Jan 2009 in Stop Foreclosure, by

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Legal Defenses to Foreclosure

Foreclosure Fight asked:


The following are legal defenses to foreclosure to beat the bank:

 1.       Truth in Lending Act (TILA) violations enabling rescission.  If your loan is a refinance, the bank must have provided you a set of disclosures at the time of closing.  If these disclosures are inaccurate, the loan is statutorily rescindable under TILA.  For example, in a foreclosure action, the finance charge must have been accurate within $35 or the loan may be rescindable.  This means the loan is cancelled and all money paid to the lender is refunded.   

2.       Truth in Lending Act (TILA) violations enabling damages.  If you purchased the property  with the loan or used the proceeds to refinance and proper disclosures were not given, then you may be entitled to money damages to offset the foreclosure.

3.       Home Ownership and Equity Protection Act (HOEPA).  This is a very powerful federal law governing high cost refinance loans.  If your loan is under $150,000 or the initial rate was above 8%, you should evaluate your loan for violations of this act.  Violations here enable rescission and substantial money damages that can be in excess of the loan’s dollar amount.

4.       Failure to Provide a Correct Notice of the Right to Rescind.  There is a specific notice that must be provided to refinance customers at closing.  If this form is inaccurate or incorrect, the loan is rescindable up to three years after the closing date. 

5.       Breach of Contract.  Many times the lender will do things that are unfair or unjustified before starting the foreclosure process.  Just as you have an obligation to pay the mortgage, the lender has a responsibility not to interfere with your ability to do so – like force placing insurance making the payments substantially more expensive than they should have been.

6.       Real Estate Settlement Procedures Act.  This federal law governs many types of disclosures that lenders must provide at the time of closing, in addition to prohibiting things like kickbacks and unearned fees.  It enables damages, and sometimes rescission if the error triggers TILA.

7.       Fair Debt Collection Practices Act.  This federal law requires servicers or lenders who obtain the mortgage after default follow specific protocol in attempting to collect on the debt.  A failure to follow this law enables statutory damages and attorney’s fees.

8.       Fair Credit Reporting Act.  This federal law governs lenders ability to report information about the mortgage and requires the accurate reporting of negative information.  Violations of this act also enables damages and attorney’s fees.  Punitive damages might be available under this act.

9.       Real party in interest.  This is a procedural defense to foreclosure that can be extremely effective at stopping the lender’s ability to foreclose.  It essentially questions the ownership of the mortgage and questions whether the foreclosing party is, in fact, the holder of the mortgage and note.

10.   Unconscionability.  This defense is focused on the events surrounding the creation and closing of the mortgage loan.  A violation here gives the court great leeway in deciding whether the mortgage should be voided or changed.

11.   Failure to state a claim upon which relief can be granted.  This general defense attacks the lender’s ability to foreclose and is can be used in conjunction with one of the other foreclosure defenses.

12.   Failure to establish conditions precedent.  Want to get a foreclosure action thrown out of court right away?  Use this defense that attacks the lender’s pre-foreclosure processes.

13.   Failure to comply with FHA pre-foreclosure requirements.  FHA requires every lender to mail a booklet called “How to Avoid Foreclosure” and set up a face-to-face meeting with the borrower before foreclosing (in most cases).  If the lender does not take these steps, then it cannot foreclose.



foreclosure refinance

Published on 21 Jan 2009 in Stop Foreclosure, by

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Stop Foreclosure Sale

Jill Borash asked:


Make a list. I made a list of exactly what I owed and then made another list of possible ways to get the money I needed. Making a list of exactly what I owed helped me get a better handle on exactly what I was dealing with. You cannot stop foreclosure sale unless you truly understand where you are at. You can get exact figures of what you owe from your mortgage company. It might take them a day or two to get those figures together.

One of the things I did when making this second list of ways to get the money was to not discount any idea, no matter how crazy it seemed. Being able to stop foreclosure sale on your home may mean getting uncomfortable and thinking outside of the box. Just sit down and generate as many ideas as you can.

Keep all contact info together in one file and have all of the important stuff on one piece of paper. Having the important stuff on one piece of paper stops you from having to track down contact information and loan numbers every time you call your mortgage company. And trust me, you will be calling your mortgage company a lot. If you want to stop foreclosure sale on your home, dealing with your mortgage company a lot is something that you are going to need to get used to. And every time you call in, you will need your loan number so always have that easily accessible.

I made a file with all correspondence that I had with the mortgage companies, all payments I made to them, everything important that had to do with my loan. On the front of that file, I stapled the piece of paper that had all of the vital information I needed whenever I called my mortgage company. Getting myself organized is one of the things that helped me stop foreclosure sale.

And whatever you do, do not panic or worry. I know that is easier said than done when you are in the middle of trying to stop foreclosure sale on your home. Panic will simply stress you out and keep you awake at night. It also can stop you from seeing solutions. And worry has never fixed anything. You will never stop foreclosure sale on your home by worrying about it. It is impossible to worry your way out of foreclosure. Instead focus on what is in your control and what you can do.



In Foreclosure Need to Refinance

Published on 21 Jan 2009 in Refinance Mortgage in Foreclosure, by

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