Expert Foreclosure Help

Learn How to Painlessly and Quickly Avoid Foreclosure

This article is specifically directed at anyone who would like to learn how to avoid the stress and embarrassment of home foreclosure in the STATE OF TEXAS.

Note: A whole book could be written on this subject but I’m going to limit the discussion to the major points for brevity here. If you’d like to find out more about the topic see my website URL below.

If you’ve been watching the news, CSPAN, CNN, PBS, MSNBC, etc., lately, then it’s not news to you that foreclosures are up across the nation. Currently 1 in 10 homes is in some state of default and with the Alt A wave of loans getting ready to default, that number is expected to go up significantly (this article written mid-Jan 2009). Couple this with the deteriorating job market and financial sector, and you should be able to see the writing on the wall.

The following bullet points are a very condensed “Reader’s Digest” version of the Texas foreclosure timeline:

1. DEFAULT - Technically loan goes into default after first missed payment but lenders usually don’t notify their lawyers to take action until about 90 days late or 3 months of missing the loan payments.

2. NOTICE OF DEFAULT - Trustee posts public Notice of Default (NOD) at courthouse of county property is located in sometime after default and at least 21 days before the auction.

3. AUCTION - The home is auctioned off on the courthouse steps on the applicable first Tuesday of the month. Since I attend these auctions myself on a routine basis, I can tell you that usually the homes wind up getting “taken back” by the lender. Only about 10% are getting purchased by investors and prospective home owners looking for discounted properties.

Bottom line on the timeline, we in Texas are called a “short state” because most of our home loans are secured by Deeds of Trust. This means we have a non-judicial foreclosure process that is VERY FAST. It doesn’t take 6, 9, 12 months or more like in some other states. It can come very quickly so getting emotionally “locked up” and doing nothing about the process is the worst thing a homeowner can do.

As to the reasons homeowners are faced with foreclosure - they run the gamut. Some of the more common reasons for hardships are:

1. Job loss.

2. Divorce.

3. Health/medical problems.

4. Adjustable Rate Mortgage (ARMS), and Option ARMS, and off-shoot loans.

5. Here in Texas we’ve had A REAL PROBLEM with builders and lenders seemingly ignoring the fact the taxes on new homes are based on unimproved land. This causes new construction homeowners to be hit with higher escrow payments the second year. I’ve personally heard of payments increasing due to the phenomenon as much as 50%. WOW.

ADDING TO THE STRESS: Generally, after loans go “over 30″ days late, the homeowners will start getting mail and phone calls from Bankruptcy Lawyers, “foreclosure or loss mitigation counselors”, etc. This usually is not helpful to the homeowners in foreclosure, it just adds to the stress because their already fielding multiple communications from their home lender’s collections department, as well as other lenders.

Options available to homeowners depend on their loan types (conventional, FHA, VA, Freddie Mac/Fannie Mae, FDIC), their specific lenders, the amount of equity (if any) they have in the home, and their desire to stay in the home (or not). Some of the more common options are:

1. Sell the house on open market and payoff the arrearages on the defaulted loan.

2. Refinance (only option involving a new lender).

3. Forebearance and/or Loan Modification.

4. Short Sale

5. Deed in Lieu

6. Bankruptcy

7. Foreclosure

I tried to list the above options in the order of severity to the homeowners. Of course this is arguable and depends on the specific circumstances.

Don’t expect or wait for congress, or your lender, or some non-profit loan counselor or “foreclosure specialist” to help you out of the foreclosure mess. Locally, in my home county of Tarrant County (Fort Worth and surrounding cities), we’re averaging about 1,400 foreclosures per month. Not much help going on here.

Additionally, the recent $700 Billion TARP bailout for big banks should give you some idea as to the effectiveness they’ll have helping homeowners. NOT MUCH HELP THERE ME THINKS.

So it’s up to you to take care of you and yours as far as foreclosure goes. I can tell you that a good local Realtor who specializes in short sales can be of great assistance. Impartial I may be.

For the homeowners I usually assist, aforementioned foreclosure options 1 and 2 are not viable. Nor are options 5, 6, and 7 from a negative impact on credit perspective. So, I specialize in and have much experience doing loan modifications and short sales. I have helped homeowners who were days and even hours away from having their homes auctioned off.

Generally, loan modifications are a good fit for homeowners who want to stay in their homes and meet the following criteria:

1. Must have more than 12 months elapsed since current loan was originated.

2. Must have incurred verifiable hardship (see common reasons for hardship above).

3. Hardship must now be resolved to point that modified payments are manageable.

4. Must not have previously modified current loan within past 36 months.

Also, generally, short sales are a better fit for those clients whom can’t meet the above loan modification criteria and/or who’ve determined that staying in the house is not in their best interest.

Regardless of the particular option pursued, the first thing I do is get the scheduled foreclosure postponed. That gives us breathing room to negotiate the best option for the homeowner.

In summary, as someone who deals with people in foreclosure on a daily basis, it’s my experience that the homeowners have been massively let down by their banks, lenders, and loan professionals. The banks seem like a “well oiled” machine when it comes to their foreclosure processes. The “foreclosure machines” just seem to have a will of their own once started. Customer Service Representatives at the banks/lenders act like there’s not much they can do to stop foreclosures once the process is started and a little human intervention is called for. Caveat - this statement doesn’t apply to all banks/lenders. Some are very good and will react with appropriate human intervention as late in the process as an hour before the auction - I KNOW THIS. But most banks act like it’s just too much trouble to help homeowners in trouble.

This very unhelpful and uncustomer friendly attitude by banks/lenders makes it very fulfilling to me - and is much appreciated by my clients in distress - when I can step in and help those who need help. Working loan modifications and short sales is not the easiest nor most lucrative niche in the real estate brokerage business, but it is absolutely one of the most rewarding.

If you’d like to learn more about how to help yourself or someone you know avoid foreclosure (specifically in Texas but general information applies in all states), just click on the link below.

http://www.KentDills.com

Although I have received specific training and have experience working with Texas foreclosures and short sales as a Texas Licensed Realtor and a Certified Short Sale Professional (CSP) , and have helped numerous homeowners in Dallas/Fort Worth (DFW) stop and/or avoid foreclosures, I’m not an attorney or an accountant. If feel like you need to consult an attorney or an accountant, please do so.

Kent Dills, BS, MS, e-PRO, Certified Short Sale Professional

If you’d like to see some of my Short Sale listing in the DFW area of Texas, just click on the link below.

http://www.DFWShortSales.net