If you are waiting for government help to stop foreclosure, you will need to wait until President Elect Obama and the new congress is seated before you have any financial difficulty.  That’s because the existing program, Hope for Homeowners (H4H) is great for the government but not so good for anybody else.  When the initial plan was unveiled by the Federal Housing Administration (FHA) the anticipation was that it would help to save over 400,000 homeowners from foreclosure.  H4H went live on October 1st, 2008 and in the first two months relatively few homeowners have taken advantage of it. There will be many articles touting it as a great thing that will help many people.  To me, it is a fairly stupid idea.

H4H requires lenders to take a serious haircut and for borrowers to give up their equity.  At first look, it seems like a good idea.  Under further investigation I think it falls apart.  Let’s take a look at how the FHA describes this will work.  For purposes of discussion, we will presume that you paid $250,000 for the house with a 10% down payment.  The example information below is taken directly from the FHA website.                                                                                          

These are examples of how the unique equity and appreciation sharing elements of this program work.  Keep in mind that these are only examples, and your actual experience will depend on many things, including how much your home increases or decreases in value1

Let’s say your home has an appraised value at the time you receive your FHA mortgage of $200,000.

And your mortgage is 90% of this, or $180,000.

This means the initial equity is the difference between 1 and 2, or $20,000.

In this example, you and the FHA share this $20,000 when you sell your home or refinance your loan, because the program requires you as the homeowner to share the “equity” created when the lender walks away from $45,000 of debt.

Here’s how that $20,000 would be split:

If you sell or refinance:

During Year 1     FHA receives 100%, or   $20,000 you receive 0%, or           $0

During Year 2     FHA receives 90%, or      $18,000 you receive 10%, or        $2,000

During Year 3     FHA receives 80%, or      $16,000 you receive 20%, or        $4,000

During Year 4     FHA receives 70%, or      $14,000 you receive 30%, or        $6,000

During Year 5     FHA receives 60%, or      $12,000 you receive 40%, or        $8,000

After Year 5        FHA receives 50%, or      $10,000 you receive 50%, or       $10,000

So, if you sell or refinance right after receiving the new loan, the FHA keeps the equity that was created, and you don’t receive any of it.  On the other hand, let’s assume you stay in this loan and don’t sell or refinance for ten years.  At that point, you’re entitled to half of the equity – in this example, that’s $10,000 – and the FHA is entitled to the other half2.

In addition to this equity sharing, you will have to share any future home price appreciation with the FHA.  This means that, if your home has gone up in value between the time you receive your FHA mortgage and the time of your home sale (or other disposition); you will share the amount of this increase with the FHA (less closing costs and a portion of any improvements you have made).  This is a 50/50 split that does not change over time. 

For example, if:

1.            The value of your home when you take out this loan is……………………$200,000

2.            After some years, you decide to sell.  Now the home is worth…………………$250,000

3.            That means the appreciation is the difference between 1 and 2, or………………$50,000

In this example, you would keep half of this, or $25,000.  The FHA would also receive half, which is also $25,000.

Naturally, if the value goes down, there will be no equity to split and therefore no issue. Fortunately, given enough time, home values always improve, so you will see some proceeds from equity growth at the time you sell or refinance.  Did I mention that you also cannot go get a second mortgage except for making home improvements?  That’s right!  A second mortgage would cut into the equity, of which the government is entitled to half, unless you’re making improvements and thereby increasing the amount of equity that the government gets.  Even if you are currently in trouble, would you consider using this type of government help to stop foreclosure?  Or would you look for some sort of assistance that is not so intrusive?

Now I know what you’re thinking, what if I don’t sell my house?  I’ll just stay in it until a mortgage is paid off.  Maybe even pay it off early and enjoy the house in my retirement.  This way I’ll never pay the government anything.  Not so fast!  Take a close look at the information above and you will see which you must pay the government their half of the equity when you refinance, sell “or other disposition” of the property.  Your estate could potentially have to pay the government half of the equity when they inherit. This could force them to sell or refinance the house.  Is that what you want?

Today banks are in the mood to negotiate and modify loans in order to avoid foreclosure in the first place.  This could be a far better option for you than expecting any government help to stop foreclosure.  I’m afraid that help from the lender is the best you’re going to do, at least until the new President is seated.

How To Avoid Foreclosure San Diego

There is a new streamlined loan modification process that can help hundreds of thousands of homeowners who are currently at risk of foreclosure. For most homeowners, it is preferable to have the assistance of a professional foreclosure consultant in dealing with the entire loss mitigation process. Foreclosure consultants deal with loss mitigation specialists every day and have no emotional attachment to your situation. They are able to remain objective and ensure that you are represented with the maximum of fairness and respect.

The loan modification process involves various elements and can be daunting to say the least for the vast majority of homeowners. Everyone experiences financial hardships from time to time. The economy is not the healthiest that it has ever been currently and there are thousands and thousands of new foreclosure filings every month. In September of 2008, there were more than 81,000 foreclosures initiated in the US. These are record numbers and both the federal government and the mortgage lenders understand that homeowners need to be given all of the consideration possible to catch up on their delinquent mortgage payments.

Here are some of the requirements involved in the loan modification process:

A letter of hardship that explains to the lender why you have fallen behind on you payments. This letter needs to be honest and convincing. You are attempting to get the lender to modify your loan. They are under no obligation to do so;

-Recent pay stubs or alternate financial statements;

-Copies of your tax forms;

-W2 forms;

-More as required by your lender.

The loan modification process can take time so you want to initiate action as soon as it is possible to do so. It is imperative that you develop an organized plan and then are very communicative with the lender. These are the reasons that so many homeowners find it beneficial to hire a professional foreclosure consultant. Foreclosure consultants are experts at the loan modification process and at dealing with lending institutions in general. They do it every day.

The goal of the loan modification process is to establish a realistic repayment schedule that works for both the homeowner and the lender simultaneously. A successfully modified loan will normally involve:

-Lowered monthly payments;

-An extended loan period;

-A partial repayment of the delinquent amount;

Your foreclosure consultant can also instruct you on just how to obtain a loan from the Federal Housing Authority (FHA) that will bring your mortgage current and stop foreclosure. The important thing to remember is that there is still hope for you and your family to keep your home. Foreclosure doesn’t have to happen. You simply need a solid plan of action for dealing with the loss mitigation department at your mortgage lending institution.

Contact a professional foreclosure consultant at Stop Foreclosure Help Today to discuss all of your options. You can save your home from foreclosure!

How To Avoid Foreclosure San Diego

Need To Refinance To Stop Foreclosure

If you are in a position that you need a stop foreclosure refinance for stopping foreclosure immediately, you will be happy to find out that these types of loans are available as long as you have a significant amount of equity in your property. What this means is that the total balance due on your current mortgage, in addition to any other liens on your property such as a second mortgage, property taxes, unpaid judgments, etc. plus the closing costs of a new loan do not equal an amount greater than 65% of the appraised value. In your application to the lender, you will need to provide an estimated property value, as well as the identification of the liens on the property and the estimated amount due on each of the liens. If the lender is a equity only lender, and if the information you have provided supports their loan to value criteria, they will proceed with ordering an appraisal immediately from a licensed appraiser who will come to your property to determine its current fair market value. Documents, of course, will need to be drawn up, and an escrow account will need to be set up just as quickly so that the documents can be delivered hastily to the escrow company so you can sign the new loan documents, and they can be reviewed and accepted by your new lender. In addition, a stop foreclosure refinance may require an extension from your current lender if the trustee sale is imminent, so that your new loan has time to be completed, which includes the necessary time for the wiring and processing of all funds. By the way, by researching and comparing the best stop foreclosures services in the market, you will be able to determine the one that meet your specific financial situation, plus the cheaper and quicker options. However, it is advisable going with a trusted and reputable stop foreclosure specialist before making any decision, this way you will save time through specialized advice coming from a seasoned advisor and money by getting better results in a shorter span of time.

How To Avoid Foreclosure San Diego

The loan modification process can assist homeowners who are at risk of foreclosure to stay in the homes that they love. If you are experiencing temporary financial hardship and have fallen behind on your mortgage payments, then you need to understand the options that are available to you and your family. Talking with a professional foreclosure consultant can help you to understand your rights and to develop a solid action plan to stop your pending foreclosure.

Here are just a few of the topics that you can discuss with your foreclosure consultant:

Developing a feasible plan for loan repayment

You may have experienced a setback recently that has caused your lender to file a Notice of Default against you. It is OK. There is still time to intervene and stop the foreclosure from ever happening. Time is of the essence though. You need to be proactive and get in touch with a foreclosure consultant as soon as possible in order to maximize your potential to successfully stop the foreclosure. You can discuss realistic repayment possibilities and the foreclosure consultant can then approach your lender’s loss mitigation team on your behalf.

A loan from the Federal Housing Authority:

Your foreclosure consultant is an expert at helping you obtain a loan from the FHA to cover the delinquent amount of your mortgage payments and bring your loan current. There will be no interest or payments on this loan from the FHA until your mortgage is refinanced or your home is sold. You must be between 4 and 12 months behind on your mortgage payments in order to receive the FHA loan.

Loan modification:

Your foreclosure consultant will work with your lender to get your loan modified and bring it current. This will involve several aspects including

Partial payment of the amount delinquent;

A letter of hardship explaining your legitimate reasons for falling behind on your mortgage payments;

Relevant financial statements presented to the lender;

Pay check stubs;

W-2;

Tax return form copies;

Banking statements;

and more as required by the lender…

It’s important for you to realize that just because you desire to enter into the loan modification process doesn’t mean that the lender will be willing. You must convince the lender that modifying your loan is in their best interest. It is the goal of the lender to minimize their own losses for the long run – nothing more. It is all just a singular component of the loss mitigation process to them. For that reason, it is also very important to act immediately. The loan modification process is time-consuming and needs to be initiated as promptly as possible in order to maximize your chances to stop your foreclosure.

If you are facing foreclosure and need assistance in dealing with your mortgage lender, there is help available. Just visit us at Stop Foreclosure Help Today and you can be on your way to successfully stopping your pending foreclosure and being able to relax again. We are always here for you.

How To Avoid Foreclosure San Diego

Stop Foreclosure

Here is a list of 10 things that might help you stop foreclosure, before you even get a foreclosure warning or a ‘late payment’ letter.  It’s not a ‘to do’ list, it’s actually a ‘NOT to do’ list…but follow this like it’s the 10 commandments, because each and every one of these offenses has the potential to send you hurtling over the edge of financial despair.

1. Do NOT fail to accrue savings for an emergency.Many wants and needs face each of us each day. Every dollar we earn seems to have its path determined before it comes to our hand. This often results in people putting aside little or no savings for a rainy day. Yet, rainy days do happen, that fact we know. I would love to see homeowners with six months of mortgage payments in savings. As a minimum people should have one to three months of mortgage payments as a reserve to help stop a foreclosure.

2. Do NOT get caught without a Home Equity Line of Credit in place.If something comes up forcing you to stop a foreclosure you will need money fast but the options may be gone by then. At least 90% of foreclosures could be prevented or delayed if home equity lines of credit were previously activated. Setting up an equity credit line can often be done for no cost and can lock in rates as low as 4%. In most cases you pay nothing each month if you do not access the line. No one ever expects sudden health problems, loss of a job or emergency requiring funds fast. By definition, these unforeseen events might prevent obtaining a loan once they occur. By setting up a home equity credit line before you ever miss a mortgage payment, you will have money when you really need it. No reason to fill out an application again, just write yourself a check. When things get back in order, pay back the line and then use it again the next time. Just be careful not to use the line for frivolous purposes and you will love your home equity credit line – especially if you never have to use it.

3. Do NOT miss a mortgage payment.This may seem like a “no-brainer”, but every foreclosure traces its origin to missing one mortgage payment. Keep these things in mind here:

1. Skipping a mortgage payment ranks as a far more serious issue than missing a utility or credit card payment. Consider not spending on non-essentials, ignoring a different bill or using savings before letting a mortgage obligation pass.2. Once you have missed a mortgage payment you have started down a slippery slope and missing a second, third or forth payment becomes easier from a psychological point of view.3. Once you have missed a mortgage payment, your credit suffers an immediate blow, which may stop you from getting the loan you need to save your house. While some foreclosure prevention loans remain options deep into the foreclosure process, how much you can borrow decreases with each corresponding decrease in your credit score. Often the difference between what you could have taken as proceeds from a foreclosure prevention loan or refinance before you miss your first mortgage payment and the loan available after missing several payments means the difference between keeping or losing your home.

4. Do NOT fail to ask for help.Some say, “A friend in need is a friend indeed” but when it comes to trying to stop a foreclosure, pride must take a back seat. Fear, shame and embarrassment just touch the edge of the deep emotions that affect someone losing their home to foreclosure. The last thing someone in foreclosure wants to do is admit to a parent or sibling that they have gotten into such trouble. Yet no one other than a parent, sibling or close friend would stand by your side and help you through an experience as difficult as a foreclosure. Remember these items:

1. People will learn of your situation when it hits the papers or when you have to move out of the house, wouldn’t you rather they heard the news from you first?2. Most people whom you care about will be more understanding than you expect and will not try to make you feel like a failure.3. You may be surprised at what kind of help will be offered and the difference it can make in saving your home from foreclosure and making you feel better about the whole situation.

5. Do NOT ignore the lender.Somehow getting behind on a mortgage comes with a built in belief that phoning your lender constitutes a sin or that a call to a lender will result in their ripping your head off right through the chord. In truth, most lenders appreciate knowing why you are having trouble and like updates on how things are going, especially when your problems have justified reasons like health issues or the loss of a job. Treat letters from your lender as wake up call from a concerned neighbor rather than a threat from a bully. Remember – banks want to help get you back on track, they want their payments not your house. If you do not think you can talk to them yourself about a plan there are professional foreclosure negotiators who can help if you have fallen behind.

6. Do NOT deny you have a problem.The technique most commonly employed to deal with a foreclosure or financial crisis remains the “ostrich” method of ignoring the problem. A related option involves reacting to the issues by losing hope and giving up. Following these paths will surely lead to never stopping the house foreclosure. From the time one evens thinks a payment will be late only a limited amount of time exists until the foreclosure auction and with each passing day more options become unavailable. Face the problems, deal with them, and find solutions.

7. Do NOT think you have no options, Do NOT fail to take advantage of them.You may believe, or your lender may lead you to believe, that you must pay them in full or lose your home to foreclosure. In fact, many options exist which will allow you to keep your house and stop the foreclosure proceeding without paying all of your arrearage at once. Some choices may even reduce what you owe on your property by tens of thousands of dollars. Almost everyone has some options and the sooner you act the more options you have. As the foreclosure date gets closer, options continue to become unavailable until by the foreclosure date only payment in full or a bankruptcy filing remain. Read more about what foreclosure prevention options you have and take action as fast as you can.

8. Do NOT spend what money you have on other bills.After missing mortgage payments for 3 or 4 months a mortgage company may “call” or “accelerate” the home loan. Once this happens they no longer take a single monthly payment, instead insisting all back payments be made at once. While other options short of paying all arrearage may be negotiated, the biggest mistake people make at this time involves allocation of what little cash they do have. It almost seems natural since the mortgage company says they do not want your money, and the second mortgage company, credit cards and others call everyday demanding money, the proper thing to do it pay the others. If there are ten people calling, making nine happy means fewer calls for you and less headaches in the short run. In the bigger picture this represents a critical mistake. At some point you will need those funds to save the house. Many methods exist to stop a foreclosure but they will all require money. Ask yourself this, “Would you rather lose your credit cards or loose your house?” If you want to keep the house and you cannot pay what they want just save what you can, you will likely need it for whatever steps you might take to save your home. For much more on this subject read “Who to pay when you can pay everyone”.

9. Do NOT stop making payments.You’ve missed a mortgage payment. Now comes the second month and you get a bill for two payments. Part way thought the month you have the money for one payment, but the bill says you owe two so you do nothing. Think carefully before you fall into this trap. There will come a time when the bank will demand you pay all you owe them and they will take no less. Until the bank refuses to take your money consider making what payments you can. This will show the bank you intend to pay them and show them efforts are being made. More importantly if over four months you made only two payments you may be only 60 days behind, while that may not make the bank happy, it may not meet their criteria to start a foreclosure. Keeping in touch with the bank and making some payments can delay the start of foreclosure many months. Hopefully during that extra time you can solve the underlying problems and avoid ever having a foreclosure. On the other hand, if you have no hope of ever keeping the house anything you pay to stay longer should be viewed more like rent, which may or may not make sense depending on your personal circumstances.

10. Do NOT miss bankruptcy filing deadlines.Proper filing of a Chapter 13 Bankruptcy always stops a foreclosure in its tracks. When a Chapter 13 plan to pay back creditors meets approval from the court and the debtor pays all the payments under the plan the foreclosure never starts up again. Failure to make payments gives the creditor the option of restarting the foreclosure when it left off before the Chapter 13.

1. Points to remember: You must file on time; failure to meet a filing deadline could result in losing your home.2. You must make all payments required under the plan; otherwise creditor can start the foreclosure back up.

How To Avoid Foreclosure San Diego

Government Help To Stop Foreclosure

Many advocates believe there needs to be an increase in government help to stop foreclosures. With the recent increase in foreclosure rates, many politicians are pushing for government “bail out” for the institutions who offered subprime mortgages. What the average consumer doesn’t realize is that there are many government, state and federal, already in place to help stop foreclosure. When looking for information on government help to stop foreclosures, the internet is a great place to look.

The U.S. Department of Housing and Urban Development (HUD) has many programs in place to offer government help to stop foreclosures. The HUD web site offers many tips and suggestions for home owners that find themselves in financial difficulty and impending foreclosure. The most important step is to have open communication with your lender.

The federal government has incentive programs in place for the lender to help avoid foreclosure. There is significant assistance available for those who communicate with their lender early in the foreclosure process. HUD also has approved foreclosure counselors who will offer individualized help.

A recent collaboration of HUD/Federal Housing Administration, the Department of Veteran Affairs, the Department of Labor and mortgage lenders have provided valuable information regarding government help to stop foreclosures. If you’re facing financial difficulties due to job loss, military service, or natural disasters, there are many programs providing government help to stop foreclosures. Contacting any one of these agencies is an important step in gathering information to help you keep your home.

Victims of a natural disaster have special government help to stop foreclosure that has been made available through the national government. If you were a victim of a national tragedy, such as the attacks of September 11, 2001, there may still be help available through the disaster relief plans the federal government has in place. Military families who are suffering financial hardship due to deployment or disabilities caused during active duty also qualify for special programs to help them keep their homes.

The most important step when looking for government help to stop foreclosures is to contact your lender. Lenders have the most up to date information on all the government programs available and can tell you if you qualify for any of them. Lenders have workout options that help you keep your home. These options work best if you’re only 1-2 payments behind, so contact your lender early. The farther behind you get, the fewer options there are.

Government help to stop foreclosures is available; you just have to act early to be able to benefit from most of these options.

How To Avoid Foreclosure San Diego