If my modifation is not approved, will i automatically be in foreclosure.

Asked by peace2u, Phoenix, AZ Sat Apr 25, 2009

If my loan modification is not approved and i am now 90 days late, will i automatically be in foreclosure? If i make a payment before 90 days and the loan mod. does not go through, will they allow me to remain 60 days late and not forclose?

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Ed Cheney’s answer
Ed Cheney, Agent, Scottsdale, AZ
Mon May 4, 2009
The best thing to do right now is to maintain communication with your lender so that they know you are doing everything you can. Many people make the mistake of hiding their head in the sand. This always makes thing worse for the borrower. Every bank is different and you never know how long they allow you to remain in your house. I know people who are still in their house after not making a payment for a year!

If you have already started the the loan mod process, then good luck I hope everything works out. If not, please read my new trulia blog on loan modification at the link below. If the loan mod doesn't work, your next step should be a short sale. Foreclosure is never a good option! The trick here is to find an agent that knows what he or she is doing. I strongly recommend finding a CDPE (Certified Distressed Property Expert) in your area. To find out more please visit my website: http://www.ForclosureUTurn.com.
0 votes
Yvonne Boute…, Agent, Phoenix, AZ
Sun May 3, 2009
Hiring an attorney to negotiate a loan modification can be an expensive proposition, possibly costing thousands of dollars. It isn't something that many homeowners feel they can afford right now. When you take a closer look at the numbers, however, the cost of a loan modification compared to the cost of foreclosure is a pittance. The Joint Economic Committee of Congress puts the price tag at an estimated $151,000 (!) in foreclosure fees, broken down as follows:
Homeowner: $7,000
Lender: $50,000
Local government: $19,000
Impact on neighboring home values: $75,000

The old rule of thumb was 90 days (3 months) late meant automatic foreclosure proceedings. Due to the current economy, this is now being pushed back to 180 days (6 months) and even up to 270 days (9 months) in some cases. In addition, depending on the lender, they will issue the foreclosure notice and then postpone it for another 90 days. Have you received any notices from your lender?

I would avoid a short sale at all costs, they are a nightmare (see my blog for more info). Here are some other resources that may help you:

Arizona & Maricopa County
• Arizona Mortgage Trouble Assistance line: 877-448-1211
• Office of the Arizona Governor: http://azgovernor.gov/
• Arizona Foreclosure Prevention Task Force: http://www.arizonaforeclosuretaskforce.com/
• Arizona Department of Housing: http://azhousing.gov/
• Neighborhood Housing Services of Phoenix, Inc: 602-258-1659 & http://www.nhsphoenix.org/
• Arizona Foreclosure Help-Line: 877-448-1211 & http://www.housingaz.com/ShowPage.aspx?ID=248
• Maricopa County Community Legal Services: 602-258-3434 or 800-852-9075 & http://www.clsaz.org/
• Association of Community Organization for Reform Now (ACORN) Housing Corp., Phoenix: 602-253-1111 or http://acornhousing.org/index.php
• Arizona Department of Financial Institutions/Foreclosure Help: http://www.azdfi.gov/foreclosure/Intro.htm

National Assistance
• Guide to Avoiding Foreclosure: http://www.hud.gov/foreclosure/index.cfm
• Field Guide to Foreclosures: http://www.realtor.org/library/library/fg329
• Acorn Housing Home Equity Loss Prevention program (HELP): 888-409-3557 & http://www.acornhousinghelp.org
• Homeowner Affordability and Stability Plan: http://www.financialstability.gov
• Help for America’s Homeowners (the Federal government's new program to assist existing homeowners stay in their homes): http://makinghomeaffordable.gov/
• Homeowner’s HOPE Hotline: 888-995-[HOPE]4673—24 hours a day/7days a week & http://www.995hope.org/

If you have other questions or need to contact me, my info is below:
Yvonne Boutell
Prudential Arizona Properties
3200 E Camelback Rd, Suite 103
Phoenix, AZ 85018
Office: 602-288-4400

Good luck with your renegotiation! Yvonne
0 votes
Tobie Ward, , Phoenix, AZ
Sun Apr 26, 2009
If you are currently working with the loss mitigation dept. you can ask for the auction date to be rescheduled, they will usally extend it an additional 30 days as long as you are working on the loan modification. If you keep in contact with them, at least on a weekly basis, you can continue to extend your auction date until the loan modification is worked out. But if you cannot agree on acceptable terms for your new loan you will automatically go into foreclosure. There are only 2 ways to avoid this, one find out if you have a Freddie Mac or Fannie Mae loan (they have special requirements for foreclosure that can lengthen the process) or if you have mortgage insurance (they will often help you with your loan modification as they don't want to have to pay out on the policy) or you can do a short sale. If you have any questions don't hesitate to call me, I work with investors buying many homes throughout the valley and we buy short sales! Good Luck.
0 votes
Keith Manson-…, , Milwaukee, WI
Sun Apr 26, 2009
The way both banks process deliquent loans is that there are three departments managing your loan: collections;loss mitigation; and forelclosure. Collections is looking for the full amount due usually. Loss mitigation who would be working your modification and foreclosure who would manage your case when sent to foreclosure. Collections and loss mit work the case at the same time.

The collection department would send to your case to foreclosure usually between 110-135 days in default. So if you can get the bank to accept the funds to keep you under 60 days in default it will not make it to foreclosure. However, your funds my be sent back if the bank does not receive the total amount due. When the loan mets the deliquent requirement, the collection department transfers to the case to the foreclosure department. At this point the foreclosure department and loss mit department work the case.

Contact the bank and make them aware that you are sending the funds because you are concerned about status of modification and do not want to incur attonney fees if possible.

Keith Manson
First Weber Group
Certified Distress Property
Greenfield, Wisconsin
0 votes
The Hagley G…, Agent, Pleasanton, CA
Sat Apr 25, 2009
no...but you may qualify for a short sale. contact an experienced LOCAL Realtor for more information.
0 votes
Lucinda Tkach, , Phoenix, AZ
Sat Apr 25, 2009
Thanks for your question!

Make sure you know all your options! If you are late on payments the banks will require the past payments brought up to date!

You may want to consider selling your home too! This is called a short sale and you will want an agent with experience and a proven record! They are much more involved than a resale!

Feel free to contact me if you have any other questions!

Lucinda Tkach
Windermere Central
0 votes
Carlos Ramir…, Agent, Mesa, AZ
Sat Apr 25, 2009
Talk with the bank, they will be the best source to answer your questions.

Have you received a Notice of Trustee's Sale? On the notice it will say when the sale will happen. After the sale occurs there is nothing you can do. At any time before the sale (just don't get too close to the sale date) you can contact the bank and tell them that you want to keep the house. They will most probably work a solution with you - if you can not reach an agreement then they will foreclose on the specified date.

Carlos J Ramirez, PC, ABR, CNE
Associate Broker, HomeSmart -
Web Reference:  http://www.SmartAZRealty.com
0 votes
Gene Yakubov…, Agent, Burlingame, CA
Sat Apr 25, 2009

0 votes
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