Foreclosure – Dodging the Sword

Like “the Sword of Damocles,” the threat of foreclosure hangs over any mortgaged home until the mortgage is paid off. Fall behind on a few mortgage payments and your mortgage lender could foreclose.

Foreclosure is the process by which a lender or mortgage company vastly accelerates the monthly payments into one lump sum; declaring the mortgage immediately due in full. If you can’t pay the entire cost of the mortgage at the time of foreclosure the lender can seize your home and resell it.

If your former home is resold for less than the cost of your mortgage at foreclosure you’ll be responsible for the remaining unpaid balance. You could end up homeless, in further debt and have your credit destroyed – all in one fell swoop.

Despite the grim possibilities surrounding a potential foreclosure, don’t panic if you think you may miss a mortgage payment. Even if you’re in a financial slump there are many things you can do to avoid foreclosure.

The first thing you should do is consult with an attorney to find out what your legal rights are. You may need legal representation to ensure your rights are upheld. You should also contact the U.S. Department of Housing and Urban Development (HUD) at 1-800-569-4287. HUD can provide you with the phone numbers of many reputable housing counseling agencies. The agencies can give you vital information on housing assistance programs offered by the government, private institutions and community organizations.

Luckily for borrowers, most mortgage lenders don’t like to foreclose on homes. If your home is repossessed the lender takes the risk of not recouping the full mortgaged value of the home at resale; a prospect no lender looks forward to.

Before you ever acquire a mortgage you should find out if any of your potential lenders will be flexible with you if you ever end up in a financial crisis. The best lenders will work with you to help you get back on track and start making regular mortgage payments again.

If you end up having difficulties making your regularly scheduled mortgage payments you need to reply to any and all letters the lender may send you regarding the status of your loan. Ideally, you should contact your lender as soon as possible if you have any problems making your mortgage payments. Request the contact information for the lender’s loss mitigation or foreclosure department for further assistance.

If you can provide documentation to support your claim of financial hardship your lender may be able to provide you with some alternatives to help you get back on track in paying off your mortgage.

Some of these alternatives include:

Repayment Plans

If you qualify for a repayment plan, your lender may allow you to add a percentage of your missed payments to your monthly payment once you resume making your regularly scheduled mortgage payments.

Mortgage Modification

If you qualify for a mortgage modification you can refinance your mortgage, extend the term of your loan or both. This will allow you to pay lower monthly payments.

Special Forbearances

If you qualify for a special forbearance you may be able to reduce or even suspend your mortgage payments for a few months. You may qualify if you lost your job, have your income cut or your living expenses drastically increase.

Partial Claims

If you have a mortgage insured by the Federal Housing Administration (FHA) or Veterans Administration (VA) and your loan is between 4 months and 1 year overdue, your lender may file a partial claim with HUD. You may qualify for an interest free loan to pay off your late payments if you can afford to resume regular payments. HUD will place a lien on your home for the amount of the loan, payable when you either pay off your mortgage or sell your home.

Whatever you do, don’t move out of your home if you’re having problems paying off your mortgage. You may be disqualified for payment assistance if your home is considered abandoned.

If you end up way over your head financially and won’t be able to save your home, even with assistance, you can minimize the financial damage of foreclosure proceedings by doing one of the following:

Holding a Pre-Foreclosure Sale

If you qualify for a pre-foreclosure sale you can try to sell your home for fair market value and your lender may forgive any remaining mortgage balance if your home sells for less than you paid for it. HUD may reimburse the lender if you qualify for a pre-foreclosure from the agency. To qualify, your mortgage must be at least 2 months overdue and your income must be cut or your expenses increase due to no fault of your own. Under a pre-foreclosure agreement, you may have anywhere from 3 to 5 months to sell your home before foreclosure takes place.

Giving Back Your Home

If all your available options have failed you may qualify for giving back your “deed-in-lieu of foreclosure.” You will lose your home but your credit won’t be as negatively impacted as it would if a foreclosure took place.

Whatever you do, you should explore every available option to avoid foreclosure on your home. If you can’t “dodge the sword” of foreclosure, the consequences may negatively impact your life for years to come.

Legal Ways Out of Debt – How to Avoid 50% of Your Unsecured Debt

All of us dream of bigger houses, a fancy car and for some, even going to big colleges are a dream. Unfortunately not all have the money to realize their dreams. It is for them that the banks have furnished various schemes or loans. By availing these unsecured loans the individuals are able to fulfill their wish. Sometimes what happens is that they might exceed the limit of credit given to them and are not in a position to repay the amount that they have spent. They avoid repaying the money that they owe the banks. The amount to be paid multiplies because of the interest charged and late fee that keeps adding on to the principal amount.

When you are knee deep in debts you might consider various methods of dodging the banks and collection agencies that keep calling, constantly reminding you of the bills you need to pay up. What are the legal ways to get out of debt? How to avoid 50% of your unsecured debt? Debt settlements or debt negotiations is the answer to all your debt related woes. By approaching a debt relief agency you can assure that at least 50% of your debts will be written off by your banks. Debt relief agencies are professionals who have a great deal of experience in dealing with creditors. They will know all the legal proceedings that will have to be followed. Great care has to be taken while choosing a debt relief agency as there are many fraudulent companies out there who are waiting to take advantage of you.

The debt relief agency will prepare a report based on the information collected from you, regarding your current income and fixed expenses. All necessary papers will be prepared that needs to be submitted to the banks. A meeting is called with the banks by the agent and it is up to him to convince them of your inability to pay up the entire amount. How much will waived off as bad debts by the creditors depends solely on the negotiation skills of the agent. An amount will be agreed upon by both the parties which can be paid in lump sum or in installments. So, why compromise your goals in life and let it shrink away in your dreams?

Fast Credit Repair! Killer Secrets To Put You Legally Ahead Of The Credit Reporting Agencies!

Years ago, after some financial mistakes, I heard about a guy in a suburb of my home town who for a few hundred dollars could wipe my credit file clean. Start over new, fast credit repair, no late payments or outstanding collections. It would take 24 hours to set it up. Sounds good, right? I didn’t believe it at first, but I called the guy to check it out. He assured me the program was completely legal and supported by the federal government. It sounded too good to be true.
Well, it was! When his office turned out to be a spare room over his garage, I decided to go a different route and hired a lawyer. I heard a few months later that the guy had been shut down and the people he had “helped” were being investigated for fraud. I dodged a bullet! A few months ago I began to see ads in the local newspaper advertising fast credit repair and just out of curiosity I called again. Guess what…years after this guy was shut down similar companies are popping up trying to sell the same idea. Get a new ID and a fast credit repair. I asked if this was legal and they told me that the government actually “sponsored” the program.

Well, I did the research this time. I checked with the IRS and FTC and found out what is legal and what isn’t. Here is what happens: a company will target anyone with bad credit and offer them a whole new credit file. The company will apply with the IRS for an Employer Identification Number (EIN) on behalf of the consumer. They give the IRS a “business name” and address not at all associated with the consumer. They then apply for credit using the EIN in place of a social security number. Since there is no history for the EIN, viola; a fast credit repair and you now have a brand new credit file.

It seems like the government sponsors this program, because you get the EIN from the IRS, but nothing could be further from the truth. You’ve probably seen an EIN before if you’ve ever filed your taxes. Check on your W2. The company you work for has an EIN. Every business operating legally does. If you start a business, you’ll have to get one as well. The issue is when a consumer gives false information to the IRS, like the name and address. This is fraud.

Some privacy experts would argue that separating the consumer and new EIN is legal. The FTC disagrees. They call this file segregation and they say it’s illegal. Since they’re the government, I wouldn’t mess with them.

There is an upside in this whole thing. Say you want to start a home business and would like to get that Costco business American Express card. You legally can. To start with the business entity you create will be tied to your personal credit. Hiring an accountant or book keeper to do the bills for the business is a great idea. It saves you time and builds a credit history for the business. Even if you are late on your personal mortgage or credit card bills, the business will become a separate entity and be eligible for credit cards and other credit.