Each month in the Austin area there are hundreds of homes facing foreclosure? It doesn’t matter if the market is hot or not, each month finds many property owners receiving calls from their mortgage companies about pending foreclosure proceedings. In fact, it is eye-opening to realize that foreclosure is so prevalent, even now, that mortgage companies have large portions of their staff dedicated to loss mitigation with entire law firms on retainer to encourage, hassle, and often do everything short of a threat, to recover delinquent payments from property owners.
The Bottom Line
Foreclosure and foreclosure prevention is a big profitable business. However, you (the homeowner) have options to stop the foreclosure of your house in Austin.
All of this is said to emphasize the point that if you are facing foreclosure you are part of an ever-present and well-defined process designed to make Big Business the winners. It only takes a few missed mortgage payments to put your property and yourself in a procedural nightmare. All of this has been designed to try to help you as long as it fits Big Business agenda and they win in the transactional process.
What is important to understand is that this process and system is designed and governed by a specific set of rules that are overseen and underwritten by government agencies and mistakes made by lenders or lenders working outside the guidelines can cause lenders and their investors’ substantial loss via denied mortgage insurance claims, fines and even jail time.
Big Business = Big Red Tape
The reason this is important to you is when you find you are continually put through a cycle of never-ending questions, repetitious paperwork and voluminous updates to your information, you will know that It is Big Business and Big Red Tape at work.
You will understand that this process and system is wrought with the individual interpretation of the rules, by each mortgage company and well-paid law firms, combined with a determination by them not to violate any rules yet give the appearance of trying to help everyone. This is what is causing all the problems and where billions are spent each year to ensure this process is completed for each borrower, not because of philanthropy but for the sake of profit and governmental oversight. Once you get your hands on this concept it is easier to work with these lenders.
The reason why so many property owners find themselves in trouble is that they don’t get it. This process is designed to look and act friendly and is couched in an overtone of concern and desire to help, though it is really only a well-defined process full of hurdles that often find property owners on the losing end of the process because the process is made for the lenders not the borrowers.
The Reality of Loan Modifications
One common example of this well un-intended deceit is when owners are trying to obtain a loan modification. The lender is in constant communication requesting documents and updates and the owner often believes because many seemingly positive and proactive steps are being taken by them and the lender, that all is well.
Many assurances are given throughout the process with the all-important, but undersold, the disclosure that the property is “still in the foreclosure status but will be removed as soon as the things are complete”. The problem is accelerated while all this is being sold to the property owner, because behind the scenes, acting in the interest of the lender, is the Foreclosure Attorney acting aggressively on behalf of the Lender.
What you don’t hear or often see is that these attorneys are aggressively filing all necessary foreclosure documents and preparing to take your property as soon as possible if anything goes wrong and due to all the Red Tape and procedures, many times things do go wrong.
This arduous process is couched in seemingly caring words and actions but often the reality of Big Business and Red Tape finds the property owners at the courthouse steps watching their home being auctioned off because there was no time to act after the un-foreseen modification or probationary modification mishaps take place and the process produces a last minute and unexpected modification denial.
What to Do First When You Are Facing Foreclosure
If you are facing foreclosure the first and most important thing to do is really basic: Ask yourself if you really want to keep your property. Most people do want to keep their home, however, if you are just tired of fighting the fight, don’t think anyone would want your property so you can’t sell it, already declared bankruptcy, or simply disgusted with the whole thing, call me at 512-825-2525.
These situations are easy for me to handle. 30 minutes and you will almost always end up with money in hand and a plan that will give you more without any further involvement by you. Even if you have talked to investors before there is almost always something that I can do. I pay cash for properties in good, bad, ugly or no equity condition. Don’t let these lenders and seminar investors wear you down. Give me a call at 512-825-2525.
If you want to keep your property from going into foreclosure then you have to obtain one of the following: A quick source of funds, more time to get the needed funds, or lender intervention. The bottom line is those back payments must be accounted for one way or another. You must make up the back payments, or, if you cannot, then your lender will have to agree to either waive the requirement to make the payments or refinance the amount in some sort of loan modification.
That’s it and if you can’t manage one of the above then you will need to sell your house or let the bank have it. On the surface, it is really basic but we will go into each, in particular obtaining more time, in detail. The reason we will spend more effort on obtaining more time is if you decide to sell you will probably have more time to take back control of the situation from the lender and give you the time needed to do a quick sale and move.
Quick Source of Funds to Stop Foreclosure in Austin
Depending on how far behind you are will depend on how successful you might be gathering the needed funds. Most lenders will take a single payment until you are 90 days late. After 90 days late single payments will be considered partial payments and will no longer be accepted which will make the total needed funds significant in most cases. In either case, the bank can give you a reinstatement amount which is different than the “amount due” on your statement.
Make sure that the reinstatement amount includes only the funds necessary to bring the loan current. Often late fees and other fees are included which may not be required to reinstate the loan. Knowing only the bottom without any extra fees can reduce the amount due to a somewhat more manageable amount.
Once you have that amount you can then decide if obtaining it is possible. Depending on what time of year it is quick funds may be able to be obtained via a car title loan, Income tax refunds, 401K withdrawal or family. If all that fails you can toss a “Hail Mary” and buy a lottery ticket or if you can get the funds if you just had a little more time then keep reading.
Stopping the Foreclosure Process
Stopping the foreclosure really means postponing the foreclosure. The only way to really stop the foreclosure permanently is to make all the arranged payments and pay off property but If you simply need a little more time to get the funds you need, i.e. stop the foreclosure then there are some great ways to do that.
Possibly you have a new job, a 401K loan is in the process, an IRS check is on its way, a work bonus is approved or a nice family member is getting funds together for you. In any case, there are some no cost, low cost and costly ways to stop the foreclosure process.
No Cost Options to Stop Foreclosure
The first rule of thumb: The closer you are to the foreclosure sale the harder it gets the free options accepted by the lender. If you are within 10 days of the foreclosure sale you should try the free items but have an emergency plan in place to buy the time you need.
The second rule of thumb is to always check with the foreclosing attorney to ensure that your sale has been postponed. Do not just accept the bank’s word, call the foreclosing attorney and get it from them.
Your first option is to just ask for the time. Explain what you are waiting on, the IRS, 401K etc. and see if there is any documentation the lender would want to see in order to postpone the sale. You may be surprised because this works.
The second option you can try to initiate a short sale. Once a Short Sale is initiated it will delay the foreclosure for at least a month but typically much longer. This option is becoming more problematic in that most lenders are requiring the initial Short Sale Package to be submitted at least 36 days prior to foreclosure. This sounds like it should be a no-brainer but history tells me most folks don’t really get motivated to act until they are 30 days from foreclosure or less. It seems we tend to believe in our ability to make things happen and put off taking this type of action until we have exhausted all other possibilities real and imagined.
The other issue is a Short Sale must involve a real estate agent and a Short Sale is a time and energy intensive for them. Short Sales are among the most dreaded transactions in the market for agents. Most agents would not undertake this to simply help you out with such a low probability of getting paid at closing….since that is not your plan. If, however, you are upside down – you owe more than the property is worth after all the costs to sell – this may be a valid “plan B” as the agent has a real possibility of getting paid for all their hard work if you are unable to come up with the money.
The third option is Lender Intervention with the all popular Loan Modification at the top of the list. This was and still is sold as the Nirvana for all property owners with delinquent payments. If you’re behind on payments no doubt you have been asked if you want to see what the lender can do for you and the loan modification has been part of that discussion. The incentives for lenders to initiate loan mods were at the root of all the mayhem. There was a schedule of monies earned, like bonuses, for lenders from initiating a loan mod to closing the loan mod. The problem was so few ever made it all the way through the system because this is the epitome of The System.
What is amazing is that Owners were sold on this idea, went all in on trying to meet all the requirements only to have most fail and go into foreclosure at the last minute with little or no warning and ultimately lose their properties. Of those who did get a loan mod most found that the bottom line savings were $100-$275 per month. This was not enough to really save anyone and with future escrow shortages and insurance increases, these savings were short-lived and upwards of 85% of those approved found themselves back in financial trouble with their properties. The few folks that did get amazing results were heralded as the norm and the reality is they were like lottery winners, far and few between but talked about all the time.
This strategy still exists but still is not much better for the owners. The gains are negligible and most do not find the long-term financial Nirvana they hoped for. With all that said it can be used as a strategy to buy some time so you can get your ducks in a row. Just do not get sucked into believing this will save you because it will not. The big danger in the loan mod arena is what I call the “surprise foreclosure”. As mentioned above, you think everything is fine only to find out a few days before your foreclosure date that your mod was denied. It happens all the time and I literally see it almost every month with folks I talk to about their homes.
My most infamous case was one lady who told me all about the details of how great her lender was and it was all working out. I warned her of the potential pitfalls and how to save herself but she did not see the need. Two weeks later I was knocking on her door letting her know I bought her house at the courthouse and she was no longer the owner. Fortunate for her I was buying the property as a rental. She did not have to completely lose her house after owning it for 15 years because she became my tenant. At least this had a happy ending unlike most.
Low-Cost Option to Stop Foreclosure
A full proof low-cost option, if initiated by yourself, is a bankruptcy filing. This will stop foreclosure proceedings by the bank every time. Once you call the lender and foreclosing attorney with the bankruptcy number from the court they will postpone immediately. This option can be initiated by you with 3 to 4 pages of paperwork and under $350 at the time this is being written. This can also be a short term or long term solution to delaying the foreclosure.
If you file but fail to show up to the first court date your bankruptcy will be dismissed but you will have effectively taken the property out of the system. Placing the property back in the system, with all the Red Tape involved, will take the lender from a month to typically two or three months. The downside is that even though you did not go through with the bankruptcy any credit cards you had active will be deactivated and the filing will be listed on your credit report. For this and other reasons this is usually a last resort but if used it will buy you the time you need if it is only a short period of time.
High-Cost Option to Stop Foreclosure
If you choose a lawyer to file your bankruptcy you may choose to follow through with the process and this can take the property out of the system for 5 months or so. This depends on various situations. This, of course, will cost over $1,000 – $4,000 in most cases. It is effective and can give you the time to reorder your finances to make it work. One important thing to remember is that when you file bankruptcy and follow through on it your debt is discharged but not forgiven.
If you choose a chapter 7 you will have to pay all the payments you missed during filing and they will be added to your reinstatement amount. Don’t be misled to believe you do not owe the money. This will cause you to have a foreclosure after a bankruptcy which is far worse than just a bankruptcy in that it demonstrates a high risk to a lender in the future given you had reorganized under bankruptcy and still failed to pay your mortgage payments.
Sell Your House to a Trusted Austin Home Buyer
We are professional and experienced Austin home buyers who deal with distressed properties and foreclosures. Zit Buys Homes can expedite the purchase of your property to help you avoid foreclosure before the bank takes your home back. Typically, we will extend you an offer on your home within 24 hours of contact.
Zit Buys Homes assures you that we are dedicated to providing ethical real estate services to all of our clients. We will always offer you a fair price for your house no matter the condition or situation you may be in. We are well versed in difficult real estate issues & can help you avoid or stop foreclosure in Austin. Call Zit Buys Homes Today at 512-825-2525 or fill out the form below to reach us.