Standard & Poor’s has just released its prominent S&P/Case-Shiller Home Price Indices for August 2010. The two indices, Composite 10 and Composite 20, include prices for respectively 10 and 20 individual cities.
Archives for October 2010
If you are facing an imminent foreclosure, don’t panic. You may have more options than you realize. (Coming up with enough cash is only one of many.) Don’t panic.
Challenge the Legality of Foreclosure
First and foremost, question everything and don’t trust without verifying.
1. Verify whether you really “fell behind” on your payments or only your mortgage servicer says so. They could be misreading some provisions of your mortgage agreement, they could have confused your case with somebody else’s (it has happened before), and what the heck, you will feel better when you check.
2. Verify whether all payments you made to the lender have been credited to you. Believe it or not, some banks have actually misplaced payments prior to foreclosure.
3. Find out if the mortgage servicer who threatens you with foreclosure owns the loan and has a right to foreclose on you. More often than not, they don’t own the note and never have.
To find a lawyer who’s got what it takes to defend you, go to a foreclosure court and look around.
Do NOT take legal advice from or pay for services of people who are not licensed to practice law. These are scams.
Invoke Elder Abuse Statutes
If the impending foreclosure affects an elderly person, a civil attorney (or criminal prosecutor) can invoke elder abuse statutes which provide special remedies for fraud against the elderly in your state.
For example in California, some of the most helpful provisions, such as a cause of action called elder financial abuse which can be applied to mortgage fraud, are included in the Elder Abuse and Dependent Adult Civil Protection Act (EADACPA).
Some legal representatives elder clients have successfully sued both the lender and the title company in order to enforce the invalidation of a fraudulent lien.
Get a Restraining Order Against An Unethical Lender
If you can prove that you have been mislead by your lender into defaulting on your mortgage payments so you could qualify for a loan modification, you may be able to get a judge to issue a temporary restraining order against them and stop foreclosure proceedings against you. (This has been done already.) This will buy you some time to come up with the money or some other idea.
File A Fraud And Misrepresentation Claim
If you have been tricked into signing away the title to your property, file a fraud and misrepresentation claim with the help of an attorney.
What If You Get Sued By The Lender
If you have been served with a lawsuit, only an experienced real estate attorney who is licensed to practice law can file an answer on your behalf and fight back for you. Get one. If you put your mind to it you can find an experienced law firm who will review your case free of charge and explain your legal options. Some lawyers will even represent you pro bono (free of charge).
Negotiate With Your Lender
In order to be able to do this, you must first find out who to negotiate with as the mortgage servicing rights on your property might have changed hands several times. Using MERS (Mortgage Electronic Registration System) you can find your current mortgage servicer to initiate negotiations for revised mortgage terms to avert foreclosure.
But while negotiating a mortgage modification or another settlement with your mortgage lender is an excellent idea, you need to be extra careful in order not to get into bigger trouble than you are already in. Don’t believe a word the lender says until you have it in writing.
Also, if you do enter into a settlement agreement with your lender make sure they agree in writing to not pursue a case against you. Unless you have this waiver in writing, they could very much do so regardless of any other loan modification terms they agreed on on paper.
Cash For Keys
In a cash-for-keys exchange, you can prevent a foreclosure by moving out and even negotiate a cash payment towards your moving expenses in return for leaving the property in pristine condition.
By some estimates, as many as half of all repossessed homes have substantial damage.
Consent To Foreclosure Judgement
In a consent to foreclosure judgement, all rights and the title are turned over to the lender free and clear of all claims (with rare exceptions such as claims of the federal government; including rights of reinstatement and redemption of any junior lien holder who failed to object) in exchange for a waiver of the lender’s right to any personal judgment for a deficiency. This will also bar the lender from seeking a deficiency not only against you as the borrower, but also against any co-borrower or other person who is liable for the mortgage.
For example, if your parents co-signed with you and they want out safely in order to be able to protect their assets, this might be the way to go.
A consent to foreclosure judgement could be an acceptable option if you have another place to live and don’t mind the hit to your credit report.
Deed Your Home, Then Rent It From The Lender
You could deed the home to the lender in exchange for release from mortgage obligations. This is called a deed in lieu (of foreclosure). The lender avoids costly foreclosure proceedings and may be willing to rent the property back to you if the numbers add up. But beware: For you, deed in lieu is a good idea only if you can get the lender to agree in writing that they will not pursue a deficiency judgement. (A court could find you liable for at least a part of the still-outstanding loan and this is not such a good deal).
The “B” Word
If your only problem is your mortgage, the scary “B” word (bankruptcy) should not even be in your vocabulary. Forget about it real fast.
Some states such as New Jersey have mediation programs which may forestall the foreclosure action if you press the right buttons.
(HARP and HAMP, two flagship programs of the U.S. federal government, have been a huge disaster so far. You can read more about it here: HARP: All You Have to Do is Ask? The Pitfalls of Government-Backed Mortgage Refinancing and here: HAMP (…ered) Recovery and the Flood of Foreclosures: Why Banks Can’t Lose).
What if You Lost Your Home to Property Taxes
In case you have defaulted on your property taxes and lost your home, find out what the rules are in your state. In most states there is a time window in which you can redeem your property by paying off the investor (or the county). The faster you can do this the less you will have to pay in interest and penalties, but this is not always the case. It depends on the state and the county. Finding out how it works can’t hurt.
Fight Back Wisely
A growing number of borrowers all across the country are falling victim to “mortgage negotiators”, “foreclosure prevention” or “loss mitigation” scams. Be careful who you trust.
If you happen to be living in a non-recourse state (where the lender cannot go after you), your best option could be to walk away from your mortgage. But it only makes sense if the debt on your house is beyond reasonable, because it will negatively reflect on your credit report.
The bottom line is this: It’s not over until it’s over. You can minimize the fallout by thinking through all your options and picking your fights wisely.
If you are looking for a book to help you avert an impending foreclosure, here is a good place to start: How to dodge a foreclosure.
Today’s report on existing home sales in September published by the National Association of Realtors brought a mixed message. There is a lot of data, but what you really need to know is this:
- nearly one in three buyers (29 percent, to be precise) paid in cash (almost unbelievable; it’s no wonder that the median fell),
- more than one in three sales involved a distressed property (35 percent),
- the median price fell 2.2 percent year over year,
- it was the biggest monthly gain in 28 years; 10 percent up from the August data without a seasonal adjustment, corresponding with a 19 percent fall from September 2009.
The data include some of the last closings with the tax credit. The impact of the stimulus was still relevant as more than one third of home buyers were first timers.
It almost looks as if the market was hitting bottom, only the sales figures for October are expected to be much worse, even though they may be nothing more than an aberration caused by the “Robo Gate“.