Foreclosure in Salem>Question Details

Justme, Home Owner in Salem, OR

I am thinking of letting my house go into foreclosure. How does the process work?What are the ramifications? what about options?

Asked by Justme, Salem, OR Tue Jan 10, 2012

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17
This depends on the Bank you are working with. If you are with certain banks a short sale will prevent you from getting another loan with them for 5 years. It really hurts you just as much as a foreclosure. If you are really upside down you might also still owe the money even after the short sale. I would never advise someone to walk away from their mortgage, but I would consult an Attorney if you are thinking of doing so and find out exactly what the Bank is willing to forgive. http://ForeclosureIQ.com
1 vote Thank Flag Link Tue Aug 18, 2015
If all other options are no longer there, the most efficient will be to do a short sale, short sales allow you to get back to the market a lot sooner (around 2 1/2 year) vs Foreclosure, in the short sale process if lender is working with you, you can und up getting some relocation allowance ($3000 in most cases and sometimes $55000), it also allows you to stay at the house until the property is sold
0 votes Thank Flag Link Mon Sep 30, 2013
There are 10 ways to avoid foreclosure. If you are behind on your payments when you complete a short sale it will hit your credit harder than if you are current at the time the short sale is completed. It will however, rebound a bit faster. I have one client that has monitored his and his wifes before and after the short sale and they rebounded fairly rapidly, but that was the only late they had. Everything else was current.

Each person's scenario is slightly different and it is a decision you need to look through all 10 options. I am a Certified Distressed Property Expert and have successfully negotiated a few loan modifications as well. I don't charge for this service.

I will tell you that the banks would rather do a short sale in Oregon than a foreclosure due to some recent court rulings. You can also do a Deed in Lieu of foreclosure and sign it back over to the banks. I have had a couple of banks refuse to do that. Feel free to contact me if you would like to go over your options. Consultation is free, there are tax implications, but for your primary residence the tax break was just extended through the end of the year.
0 votes Thank Flag Link Mon Jan 14, 2013
I just ran across this article today... It brings up some points why you should do all you can to avoid walking away and/or foreclosure.
0 votes Thank Flag Link Mon Jan 14, 2013
Also, before you spend the $$ on meetings with attorneys and CPA's fiind out from your bank first what they're willing to do-you may not qualify for certain options.
0 votes Thank Flag Link Mon Jan 14, 2013
We decided to do a short sale as our agent advised us he said it wouldn't hurt our credit like a foreclosure, wrong, as far as out credit report it was hit the same as if we had done a foreclosure-usually sounds like a better option from the agents point of view because their making a commission but more stress for homeowner. the only upside for us was because it was a second home we were able to write in to the contract that by accepting the offer they couldn't sue us for any $$ we were short. We are now loosing our primary residence been trying for months to get a loan modifaction and was just rejected for the 2nd time, it's been about a year since we stopped making payments but because we kept persuing a modification it kind of put us in limbo, and paused the forclosure process, during this time we've been able to save $$ so when they kick us out we'll have some $$ to start over, i'm pretty sure the bank will probably give us some money too to get out and leave the place in decent shape. I've been told that now that we've been rejected for the final time to do a loan modification it should take about 4-6months for them to forclosue on us and send the sheriff to our house to post a legal notice telling us we have to leave. The one thing we did avoid with the short sale was not having our name in the local paper as a trustee sale, depending on your bank you may be able to do what they call a deed-in-lue of forclosure which means you sign the deed to the property over to the bank and save them the hassle and $$ of having to kick you out,they may offer you some rent free time in the house-usually 6 months tops, this process too will damage your credit the same as any other option but will spare you the stress of the trustee sale. I've been told that since the forclosure is on my primary residence the bank can not sue me for difference between what we owe them and what the hose can be sold for. Don't know how Oregon laws differ but this has been my experience in CA. Good luck!
0 votes Thank Flag Link Mon Jan 14, 2013
There are people out there who do want to help with homes about to go into foreclosure. Please contact me and maybe we can change your idea on foreclosure and get you a buyer instead? It'd be much better on your credit! But weigh your options and see what is best for you. If you'd like to contact me please do at: angie3m@yahoo.com Just here to help if I can!
0 votes Thank Flag Link Fri May 25, 2012
Hello there,
Your best option will be to discuss it with your real estate attorney, as a realtor we are not suppose to advice you on legal matter. Before taking a decision with foreclosure make sure to discuss all your options.

Best of Luck!
Manisha Jain
0 votes Thank Flag Link Tue Jan 17, 2012
I have a list of detailed answers to questions related to foreclosure and the short sale process at my website http://www.oregondistresspropertysolutions.com. If you would like to interact on the phone please call me at 503-838-5667.

Bill Walson
Heritage NW Realty Group, LLC
0 votes Thank Flag Link Tue Jan 10, 2012
Speak with your tax advisor and your attorney - a short sale may very well be your best option if you qualify.
0 votes Thank Flag Link Tue Jan 10, 2012
There are many ramifications and options. A foreclosure will take your home away and you will have the ding on your credit for a number of years - making you unable to get credit cards, loans, car loans, another home, etc. Not only that - many rental companies check your credit in order for you to rent a home. You should speak with an attorney and/or tax consultant - it will affect your taxes also. Dont just give up!
0 votes Thank Flag Link Tue Jan 10, 2012
I think you should sit down and discuss your options, discuss the ramifications with an attorney and a cpa to know the tax ramifications. There are 9 ways to avoid foreclosure and even though it looks like an easy way out it may not be the best option for you and your situation. Talk with someone that specializes in short sales and can get the job done for you.
0 votes Thank Flag Link Tue Jan 10, 2012
Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of Foreclosure

Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like; insurance rates, your job (yes employers are checking credit records these days).

Your credit score will be reduced by 200-400 points, short sale and deed-in-lieu-of a little less 100-200 points.

All forms of foreclosure stay on your credit report for 10 years.

After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure – “YES” Short Sale and Deed-in-lieu-of are forms of foreclosure
• Buying after a Walk Away Foreclosure
The waiting period is 7 years
• Buying after a Foreclosure
The waiting period is 5 years with 20% deposit up to 7 years.
• Buying after a Foreclosure with Extenuating Circumstances
The waiting period is 3 years with 10% deposit up to 7 years.
• Buying after a Deed-in-Lieu-of Foreclosure
The waiting period is 2 years with 20% deposit, 4 years with 10% deposit up to 7 years.
• Buying after a Deed-in-Lieu-of Foreclosure with Extenuating Circumstances
The waiting period is 2 years with 10% deposit.
• Buying after a Short Sale
The waiting period is 2 years with 20% deposit, 4 years with 10% deposit up to 7 years.
• Buying after a Short Sale with Extenuating Circumstances
The waiting period is 2 years with 10% deposit.

In addition to the waiting period and minimum down payment, you will be required to have a minimum FICO score and the home purchase must also be the principal place of residence, not a rental nor a vacation home.

Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.

Good Luck
Bob Patrick
Buy a home after foreclosure, short sale, deed-in-lieu-of or bankruptcy expert
Movin-On LLC
Helping families/people that have or will loss their home get back into another in as little as 6 months
0 votes Thank Flag Link Tue Jan 10, 2012
A short sale is your best option. Whether you go into foreclosure or do a short sale, both actions will effect your credit negatively. Your credit score will drop more if you decide to go with a foreclosure process. Also, speak to a good real estate attorney that has experience with foreclosures and talk to your tax preparer too.

Good luck,

Lee
0 votes Thank Flag Link Tue Jan 10, 2012
Do not let your house go into foreclosure, if you have a hardship the advice Ron gave below should be taken to heart. Click the link below a HUD approved counselor in Oregon, you may also call 1800 HOPE NOW, or possibly an attorney.
0 votes Thank Flag Link Tue Jan 10, 2012
Well it depends on your situation.

If you have a hardship, then negotiating a short sale is an option. If you want to try and keep your house, then a loan modification is, in theory, possible. If you want to just let it go you need to know if the property has MERS involvement. Oregon has a current issue with MERS properties and the ability of the lenders to foreclosure via the trustee's deed process. Wells Fargo has forged ahead with judicial foreclosures in Oregon on their MERS properties and there are ramifications for you as a homeowner regarding that. I wrote a blog post about that issue which I added in the web reference down below.

Whether or not you are open to a deficiency judgement relates to whether or not you have an original loan or a refinanced loan. If you took out a HELOC and used it for things other than home improvement that complicates things as well.
0 votes Thank Flag Link Tue Jan 10, 2012
The way you ask the question, I am inferring that you are upside-down;
but I detect that you do not have a HARDSHIP:
You are just Upside-Down, and you don't like it.
1. Shortsale; if you are not in a Hardship situation, your Bank probably will not let you do a shortsale.
2. Foreclosure; you will have to stop makking payments to get your bank's attention: It seems that the bank won't talk to you unless you are behind. You will ruin your credit for probably three years.
3. Deed-in-lieu; is a process where you hand them the Deed and walk away. Oregon is a Non-Recourse state, so you can probaly do this.
4. Modification; this has only worked for about 10% of the people who have tried for it. You can ask the Bank to reduce the Interest Rate, Forebear payments to the back of the Loan, or forgive some of the Principle. (Good luck on gettingsome of the Principle!)
5. Rent it out or just grin and bear it until the market recovers.

Good luck and may God bless
0 votes Thank Flag Link Tue Jan 10, 2012
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