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Some Myths about Foreclosure

June 1, 2011 By Leave a Comment

A number of myths abound the Internet and elsewhere concerning the issue of foreclosure. These are a few of the most common of them all, including the facts on what is really true.

Myth # 1:
The bank can throw you out as soon as you have fallen behind in payments,
Fact: No. You cannot be thrown out from your home until your property has been sold at an auction and the deeds of your home transferred and an issuance of a formal eviction is given to you.

Myth #2:
Once my house is sold under foreclosure my debt is forgiven.
Fact: Not Necessarily. In most cases, your mortgage debt is wiped clean, although it does reflect negatively on your credit report. Depending on the particular foreclosure laws of your state however and the mortgage agreements which you signed, you can be responsible for any difference in the amount of money you owe as well as the price which your home is sold at. Other than this, second mortgages or equity lines of credit debt which was secured by means of your home as credit or collateral will be completely your responsibility despite the fact that your home is gone.

Myth #3:
It’s better to file bankruptcy than to have my home foreclosed on.
Fact: Not Always. Bankruptcy may even affect your credit much more than a foreclosure does.

Myth #4:
Now that I’m in foreclosure, no other bank will refinance my mortgage.
Fact: Though it may be difficult to get a new mortgage, it is still possible especially if you still have enough equity in your home. About 60-70% of foreclosures are refinanced with another bank in order to get rates as well as payments which can be handled.

Myth #5:
If I go through foreclosure, I’ll never own a house again.
Fact: Only Sometimes. It is quite hard but nevertheless it is possible to rebuild your credit after a foreclosure and own a home once more. Certain banks will approve a loan which is more manageable within a few years, if you have saved at least 20% or more of the purchase price. You should also be prepared to pay a higher interest rate for a loan term which is much shorter.

Myth #6:
When the bank forecloses on my house, they’ll also take all of my stuff.
Fact: No. The bank will be unable to take your personal belongings or any furniture in order to pay back your mortgage debt.

Myth #7:
Once my house is sold at a foreclosure auction it is gone forever.
Fact: Sometimes. A number of states tend to offer a special redemption period which gives homeowners a few extra months after the sale of their homes, to pay the debt completely. This includes fees as well as interest; they can retain the property if all these have been paid.

Myth #8:
I need to do everything I can to save my house from foreclosure!
Fact: NO! Sad, but true, sometimes it’s better to let the bank take your house and start over.

Myth #9:
Only deadbeats lose their home to foreclosure.
Fact: Absolutely Not! There are a lot of reasons why people can’t pay their mortgages: an unexpected job loss; illness; death; and even divorce. As many as 6-7% of all homeowners lose their homes in the United States every year to foreclosure sales.

Myth #10:
I can’t stop foreclosure because the bank wants my house.
Fact: Bank’s don’t want your house. They are in the business of giving out loans and making money not the business of real estate and losses. Foreclosures almost always result in lost revenue, most lenders would prefer to help you find a way to stay in your home and make your payments and by so doing avoid the hassle and expenses which are related to foreclosing.

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Ways to Stall or Prevent Foreclosure

June 1, 2011 By Leave a Comment

If foreclosure something which can be stopped permanently? In most cases the answer to this question is yes, just as in most legal situations , a variety of uncommon legal loopholes exist which may be used to stave off foreclosure proceedings or even stop them completely. When you are searching for such foreclosure loopholes, you should ensure that you seek out a lawyer who has a specialty in foreclosure law as well as mortgage improprieties and the Truth in Lending Act (TILA). Getting your mortgage cleared and keeping your house may take a substantial amount of time and effort and as such it should be handled by someone with a thorough understanding of the law.

In addition to TILA violations, there are a few other ways to halt the foreclosure process. They include:

Filing for Bankruptcy.

Making a filing for Chapter 13 bankruptcy will immediately place a 30 day stop to any proceedings for foreclosure. Because laws require a bankruptcy hearing before a foreclosure can actually take place, people in areas that have backed-up court systems may get a stay of as much as a year from their foreclosure while they wait in order to appear before a judge.

Enlisting in the Active Military.

While this isn’t usually the best option for most people, getting enlisted on active duty in the military will forestall any foreclosure proceedings until you are released from active duty.

Filing a Written Answer about Your Foreclosure Notice.

In the past answering your foreclosure notice through the court system would take anywhere from a 1-6 month period. During this time you can easily figure out what next you need to do to retain your home.

Challenge the Sheriff’s Appraisal.

Making a legal challenge on a sheriff’s appraisal can legally stop any foreclosure sales for about 30-120 days all depending on how quickly a new appraisal may be completed and a new auction re-listed and advertised.

Find Someone to Make an Offer on Your Home.

By looking for a qualified buyer for your home before a foreclosure option, you can easily get it pulled off the sales listing. A large number of states do not require a buyer to make a formal offer before they actually complete the sale. By getting a friend of yours or a relative to make an offer on your home may be able to delay proceedings for as much as six months.

Notice Failure.

Any failure to notify a mortgage holder about foreclosure proceedings may result in the invalidation of the entire process. It may be for these reasons that while some people choose to remain at home, a number of others run from one place to the other trying to outrun the formal legal notice. None of these options offer any permanent solution to your financial troubles but if they are harnessed properly they may just provide you with the time which you need to get the money and reclaim your house. Once your house has been sold, it’s gone for good so any extra day which you can delay the proceedings by, gives you the opportunity to find a better solution.

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How to Avoid Foreclosure Scams

June 1, 2011 By Leave a Comment

Because the whole process of losing a home tends to be a rather scary experience, foreclosure can also leave a person vulnerable to scam artists. When you are facing foreclosure, you should make careful investigations into your available choices and check for the veracity of any source which comes to offer help, even when they look reputable.
Foreclosure rescue scams are big money for those involved, even adding much more heartaches to the problems of people who are already faced with losing their homes.

One of the more common scams which are dangled in front of desperate mortgage holders, is the so called “ credit counseling” which is offered by a number of organizations which make promises that they will help homeowners negotiate a lower interest rate or lower monthly payments in order to stave off a foreclosure. All this then comes at a very expensive fee. Of course credit counseling services actually exist and they can help but you should be wary of any service which offers promises that they can completely erase your debt.

One more scam which is rather popular these days is the one that claims you can “save your house” and “pay off your mortgage”. The whole gist behind this scam is that homeowners are convinced to sell their home to an agency for the amount of the mortgage payoff and then rent it for a specified amount of time with the option to re-buy it when they get back on their feet. However, the problem is that as soon as the deed has been signed over to the so-called agency, you have no rights over your home, even to stay there. Any new owner agency or otherwise is not required to rent it to you or sell it back. Usually, in most cases you get evicted with no option to buy back or rent your home as previously promised.

Certain other scam artists will make moves to pay off the mortgage on your home for a flat fee in order to become the new mortgage holder. Doing this is equivalent to signing over the ownership of your home.
How then can you avoid being scammed when you are most susceptible?

Be suspicious of any person or company that calls themselves a mortgage consultant or foreclosure service
Never trust anyone who solicits business through the mail or door-to-door

Be wary of anyone who offers to lease back your home or allow you to buy it back in the future. You need to question what they really have to gain by such an investment arrangement?

Beware of any company who makes promises to save your credit or save your home, especially with little or no effort or consequences on your part. The experts know this is unrealistic.

Never sign any documentation that you don’t completely understand. If it doesn’t make sense, wait!

Anything which sounds too good to be true, most often are. Real companies who want to help you out will have a serious chat with you and scour through your financial details. They will then present you with a plan which aids you to stave off foreclosure. Everything is also put into writing and it isn’t all talk. Various ways exist to stall foreclosure and a number of agencies will willingly guide you through the process. What you should do is take time and make sure that you investigate any agency completely in order to avoid getting scammed.

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