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Michael Russell's Blog

By Michael Russell | Agent in Overland Park, KS

Sorry your house got foreclosed but you didn't give the lender any other choice

There are 2 big misconceptions about foreclosure out there, 1 there are no other options available and 2my lender won't help me they only care about foreclosing me out of my home.

Why as homeowners do we believe that we have no other option than to just let the bank foreclose our home when we get behind on payments? Is it that we don't want help or that we just don't know where to look? A current statistic shows that almost 50% of the homes foreclosed in the United States happened without a single contact between the homeowner and the lender. What choice did the lender have? That is like not showing up for work for a month and wondering why you got fired?

Did you know that your lender is legally required to help you avoid foreclosure. Don't believe me? It is right there in that letter you didn't open. Well I think you got my point, so what are my options?

There are many options and they are all better than foreclosure, which one you choose depends on whether you wish to stay in your home or if you have made the decision that keeping your home is no longer an option.

1. Loan Modification- In the last 2 years our govenment has enacted several new laws to help struggling homeowners, one of those programs allows you to modify the current terms of your mortgage. if you are eligible for this program you may be able to lower your monthly payment for a fixed period of time and keep your home.  Your lender is required by law to help you seek this option. If you have been turned down for a loan modication or no longer wish to stay in your house? See options 2 & 3.

2. Deed in lieu of Foreclosure- In this scenarion the lender takes back the deed to your home voluntarily instead of pursuing a foreclosure. while in my option this is not the best option, it is still much better than foreclosure. If you are going to pursue this with your lender, try to get them offer a small cash settlement to assist you with your moving costs.

3. Short Sale- For most homeowners facing foreclosure this will be your best option. In a short sale you will be asking your lender to allow you to sell your home and for the lender to accept less than you currently owe to pay off the loan in full. Why would your lender do this? Simple, they could lose a lot more by foreclosing your home. One of the most attractive reasons to request a short sale is the ability to request that your lender forego their rights to seek a deficiency judgement against you.

4. Foreclosure- This is final judgement, in Kansas foreclosure is a legal action. The lender will have an attorney file with your County's court to seek foreclosure, this process will usually take several months and the lender at their own discretion can slow the process down or stop the preceedings. The final step in your home being foreclosed in when it is SOLD on the courthouse steps. Foreclosure is and should be your absolute last option. Once your home is foreclosed your lender reserves the right to sue you for a deficiency judgement. What? How much did your borrow? How much did the house sell for? the difference between the 2 is the deficiency. Do you want to be paying for that for the rest of your life?


Looking for honest help? Visit the link below for Johnson County Kansas foreclosure and short sale help.

Johnson County Kansas Foreclosure & Short Sale Help

Comments

By Erika Wong,  Fri Sep 9 2011, 08:37
Excellent info!

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