Foreclosure Options
I will begin knocking on doors and leaving my letters on doorsteps of those people who have defaulted and are currently in the foreclosure process. I obviously would like to offer my services to them and be able to help them in any way that I can.
My question is, what options do people in default have?
ie: Deeding the property to a relative, paying off the outstanding debt plus fees, losing the property and having ruined credit for 7 years, declaring bankruptcy.... am I missing any other options???
I want to be as professional and knowledgeable as possible, I would appreciate any comments you all might have. Thanks again for all your help!
Most people are able to extricate themselves from mortgage or tax foreclosure by temporarily resolving their problem when first served notice that their mortgagee has initiated foreclosure proceedings. They go to the well.
They can liquidate some assets, borrow from friends or family, refinance, give a second mortgage, or, ask an existing second mortgagee to advance 'catch-up' funds, tap retirement funds, enter into a workout with their lender... file a petition for bankruptcy workout plan, or sell the property conventionally.
Sometimes, the foreclosure was initiated by the lender in error.
But, unless they are able to resolve their problem permanently, they will probably fall back into default. It isn't easy avoiding foreclosure when it happens the second time. In fact, many mortgage agreements preclude multiple reinstatement within a specific timeframe. They've probably burned their bridges with friends and family. The equity has been depleted, and they'll more likely consider a sale...
[ Edited by TheShortSalePro on Date 01/06/2004 ]
Thanks All-Star, I just want to be sure that if I set an appointment to sit and discuss their "problem" I will be able to give them most if not all of their options.
If homeowner is in the pre-foreclosure stage, will any banks lend them money or let them refinance??
And the most common solution for people in foreclosure is that they opt to deed the property over to their relative. But then, the problem is still there....they still have to make their payments.
I have not seen anyone on this board lend money to these homeowners in return for interest. Is it a bad idea to do that?
does anyone know of any other options available to the foreclosee? (I don't know if that's the correct term) I plan on doorknocking TODAY, PLEASE anyone want to add to this???
Have you every thought about being a Loss Mitiagation Specialist. You seem like you would be good at this. They help people negociate with the bank. Check your search engines. Some of these compainies charge, but it would be well worth finding out who to talk to inside the banks about properties that are in default. Good Luck
DON'T DO IT!!!
I would not knock on doors!! I am a person who was temporarily layed off (and a bad bookkeeper to boot) and our house fell into foreclosure. I scrambled to get ourselves out of it which took me almost 45 days. We were BARRAGED with letters of so called "specialists" and in the meantime we are dealing with a not too friendly bank and an equally less helpful "re-con" foreclosure place. This was bad enough when people started knocking on our door. I can't tell you how poorly we treated them....we were just frustrated and trying to get back on track...our house was valuable and we weren't going to rollover. It was an insult to us to have someone knock on our door. It would be more helpful to leave a message (I guarantee a person who is in foreclosure is not answering their phone - they also have other debtors calling them). I would position yourself as a person who can give free advice in handling the banks during this time. That's the only way your going to get a response.
Signed....someone who just was in that mess
Hope this helps
One note of caution is to not give advice regarding bankruptcy, foreclosure, etc.., as this is offering legal advice. By simply adding the phrase, "I have heard of people..." you can mitigate any potential problems. Otherwise, it sounds like you have everything covered.
[addsig]
Re: Don't knock.
This is a sensative time for people, but it is much harder to dismiss a person standing in front of you than a message or letter. If people actually talk to you, your odds of closing the deal improve significantly.
In my area I am finding that these people are in such denial, that they wait until the last possible minute(auction or redemption period)to try to rectify their situation. Then they come to me with 25-40k in arrears. I had a guy this week submit to one of my sites that he was $65K in arrears!! Go figure.
Yes,
People will be in denial, but offering honest help (if you get to see the owner) could never hurt.
seekingwriter,
The financial situation for people heading toward foreclosure often cuts them off from bank loans since there is usually bad credit, not enough income, etc. The problem for one of us lending money if it were secured by the property in foreclosure is that we would have to cure the default and reinstate the loan (if possible) and foreclose ourselves.
I am not sure of this, but I vaguely recall of legislation (possibly local) directed against people who lend money knowing that the owner is unable to recover and the lender will ultimately foreclose on the property. If this is so, there is added motivation not to lend.
Thanks all for the input, I am a California Real Estate agent and I would like to offer our groups help in either helping them SOLVE the problem or if need be we could assist them in selling their house. I just wanted to cover ALL possible options a foreclosee has. That's what we're here for right?
What do Loss Mitigators do? Could it help me in my REI career in any way. Again thanks to all who replied!!!
There are a few (only three) come to mind that will lend money to someone after NOD. Each require a minimum of 500 mid score, and must have equity. Unfortuately, the later you start the slimmer anything is possible. I suggest you get with a mortgage broker, each situation is different, so there are no guarantees.
First my thoughts on knocking:
i knock on doors after the 2nd or 3rd way of contacting has failed. my first being a letter, second a post card, third a letter followed by a phone call if i can find it. if none of these are answered, then i knock on the door and simply say,"listen, honestly, i was in the neighborhood and i wanted to drop by to see if you had your problem handled yet?" Dont go screaming FORECLOSURE all over the place because they dont want any one knowing they are in foreclosure. if they say yes, ask them,"well how did you get it handled, what did you do???" dont leave until they slam the door on your face or they give you a good enough answer to where you feel convinced that they did what they said they did. on any event, leave a little appreciation gift along with your card and move along.
about my thoughts on lending money to NOD's:
i say its a big NO NO, unless it were a close friend or relative. lending money will only solve their problem momentarily and sure it'll get them caught up on their payments, but what got them there in the first place??? if the guy is disabled, hes wont be able to pay you back unless he borrows from someone else. by lending them money, its only a temporary solution to a big problem. what they need to do is find a permanant solution to a big problem and thats where YOU the INVESTOR steps in to "buy" or handle the problem for/with them. Ask them a bunch of questions of why they think they need to borrow money, ask them what they need it for, ask them what got them there in the first place, ask them what would they do once they are caught up, ask them how they will pay you back, ask them all the questions in the world until you finally find out what their core problem is and many times, they've had some tough times and can no longer afford the house and they need out. then you ask them a bunch more questions like, have you thought of selling the home??? if so, what do you want to get out of it??? how much do you owe?? would you be willing to sell your home for what you owe if i can make all your arrears and payoff some other debt that you may have???
ask them a lot of questions to find out what the problem is and then its up to you to find a solution for their problem.
of course thats my novice advice, pros may think otherwise. to be honest, i'm probably as clueless and many of you are but keep striving to get to that next step. you'll get their.
[addsig]
piti 1..
I Applaud your intentions..to offer solutions. Here are a few that I offer,.."re-cast the loan".. "Forbearance"...another is contact Fannie Mae re/ " Home Saving Solutions"....or..if it's a "F.H.A." insured loan, a "partial claim" from HUD..any one of these doors may have the answer or" they" may point your "client" to other solutions. Now, if all options fail, and "you" have been there offering "help" your credibility and sincerity should not be questioned when you propose a "short sale".
The best to you ..
mcldavid