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Category Archives: Foreclosure

But I Want to Keep my House

A conversation with the nice lady who was referred to me this morning was a reminder of why so many properties go to foreclosure auction unnecessarily. I feel bad for her. Her common law husband passed away around this time last year and with him what little income they were surviving on. She has been trying to get on disability income since that time. Meanwhile the house payments are far enough behind that the bank began sending back the payments she was able to scrape together.

At this point she is five weeks away from the foreclosure sale date. There is about $50,000 equity in the property. She doesn’t even need a short sale. We could sell her home and she would walk away with thousands of dollars which she and her 9 year old son desperately need. Instead she is going to attempt to find someone to help her get the bank to work with her even though they have refused for the past year. It’s bad enough to see a struggling homeowner have an unnecessary foreclosure when they could have avoided it with a short sale on their property, but this is much worse.

I know there are many reasons why a distressed homeowner wants to hold on to the home they are losing but it’s hard to watch. It’s hard to watch because I know the inevitable outcome; despite the time, energy, and emotion I’m sure she will put into trying to save her home, and it is devastating. It is a hard reality to accept but sometimes things just don’t end up the way we had envisioned. However, trying to force something that is not realistic can often times result in a worse outcome than just leaving the home you love. In many cases that outcome may haunt a person much longer than necessary. This is usually the case with a distressed homeowner who refuses to let go of their house and be proactive in avoiding foreclosure.

I have found that people who are struggling with an unmanageable mortgage do one of two things. Either they become proactive and are able to avoid foreclosure, resulting in a better scenario with less recovery time down the road. Or they bury their head in the sand and find themselves in a worse situation down the road than when they first realized they were headed for foreclosure. It is up to each individual homeowner which way they want to go. Unfortunately many times doing the right thing includes the difficult decision of letting go.

“Grant me the courage to change the things I can, serenity to accept the things I can’t, and the wisdom to know the difference.”

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They Call Them Zombie Foreclosures

What’s worse than having your home foreclosed on? Having it come back from the dead to haunt you after the foreclosure. Many previous home owners are learning that having their home foreclosed on may not be the end of their mortgage troubles. In some cases the foreclosure never even took place and they still own the home along with all of the responsibilities that accompany it.

In Colorado the lenders have up to 6 years after a foreclosure auction to pursue the deficiency and attempt to collect their losses from the borrower. Most of the time the lender does not recoup all of the money owed them on the note for the property and they have the right to collect. This is one reason it is in the homeowner’s best interest to work out a foreclosure alternative such as a short sale, so there are specific terms agreed upon by the borrower and lender. This is a much better option than walking away from the foreclosed property and looking over your shoulder wondering when and if the collector will show up.

Other properties are coming back to haunt their homeowners as a result of a foreclosure that never took place. In some cases the homeowner was told the property would be foreclosed on so they vacated the property, but the foreclosure never happened. Realty Trac estimates there are around 2 million properties on which the foreclosure process was started and never completed. These distressed homeowners are contacted months or years later to discover they owe money on HOA fees, water bills, and property taxes. Many times late fees, attorney fees, etc have been added on and accumulated to a bill in the thousands. Some of these homeowners filed a bankruptcy to avoid the financial obligation of the deficient mortgage debt and told by their bankruptcy attorney to just let the property go back to the bank in foreclosure. Later they find they have these new bills from the property because they are still the owners.

All of this makes it impossible for damaged credit to recover. Credit these days affects every aspect of our financial lives from interest rates to insurance rates.  Zombie foreclosure that come back to haunt makes it difficult for a homeowner who lost their home to move on with their lives. There are many good options to avoid foreclosure. If you are a struggling Denver area homeowner feel free to contact me to learn what your options are to avoid foreclosure.

 
 

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Servicemembers Civil Relief Act

I think most of us would agree that the last thing a person fighting overseas defending our country should have to worry about is their home being foreclosed on back home and having their family put out on the street. According to the U.S. Department of Housing and Urban Development there may be some help in this area.

The “Soldiers and Sailors Civil Relief Act” was completely re-written and re-named the “Servicemembers Civil Relief Act”. The bill was signed into law by President Bush on December 19, 2003. This is the law that now governs legal protections for the members of the United States Military.

Legal Rights and Protections

Service members on “active duty” or “active service”, or a spouse or dependant of such a service member may be entitled to certain legal protections and debt relief pursuant to the Service Members Civil Relief Act (SCRA). In some cases these rights extend to Reservists and members of the National Guard when they are called to active Federal service.

What legal Protections Are Service Members Entitled to Under the SCRA?

If a debt was incurred by a servicemember or servicemember and spouse prior to entering military service the interest rate cannot exceed 6% during the time they are in military service. In the case of a mortgage, trust deed or other security obligation in the nature of a mortgage this limitation on interest rate extends to one year after military service ends.

The SCRA states that in a legal action to enforce a debt against real estate that is filed during, or within 9 months after the servicemember’s military service, the court may stop the proceedings for a period of time, or adjust the debt. Additionally, the sale, foreclosure, or seizure of real estate shall not be valid if it occurs during, or within 9 months after the servicemember’s military service unless the creditor has obtained a valid court order approving the action. There are qualifications to this and the property must have been purchased prior to the time when active duty began.

The SCRA contains many other protections for active servicemembers in addition to those pertaining to home loans. For example, in certain cases leases can be broken without penalty.

How Can a Servicemember Obtain Information About SCRA?

Servicemembers should contact their unit’s Judge Advocate or their installation’s Legal Assistance Officer with questions about SCRA, or for assistance. A military legal assistance office locator can be found at http://legalassistance.law.af.mil/content/locator.php

The U.S. Department of Defense’s information source is “Military OneSource”. A servicemember or dependant who is listed as entitled to legal protection can go to www.militaryonesource.com/scra  or call 800-342-9647 for more information.

Download a copy of the entire 45 page Servicemembers Civil Relief Act (SCRA) or an abbreviated 2 page copy of a SCRA_Publication detailing some of the most common forms of protection provided by the Department of Defense

PLEASE NOTE: This is just a brief overview is in no way to be construed as legal advice. Please contact the agencies above or an attorney of your choosing for legal advice concerning your situation.

 
 

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How to Stop your Denver Area Property from going to Foreclosure

If you are facing foreclosure of your Denver Area property you have several options to avoid foreclosure. The main thing is to act now. No more waiting. The sooner you begin to check out your options the more you will have. As time goes on your best options may no longer be available.

Communicate

If you are already behind on your mortgage payments your lender will be calling and sending out notices. Don’t ignore them. Communication is key even if you don’t know what to do and do not have any way to pay them. If you don’t want to talk to them respond in a letter so they know what is going on with you. You don’t have to be subjected to nasty collection calls but most lenders have developed a more humane approach to find out your situation and let you know what your options are. Most lenders want to avoid foreclosure as much as you do. If you are not sure which approach is best for you or don’t fully trust your lender to have your best interest in mind, contact a professional for assistance in determining the best approach for your situation.

What to expect

Once you are 30 days late on a payment for your Denver area home you are in default but not in foreclosure yet. Any time after you are 3 months behind your lender may file the Notice of Election and Demand (NED). That is the official step that begins the foreclosure process in Colorado. You will know because you will receive multiple copies via certified mail. Filing of the NED establishes a foreclosure auction date about 110 to 120 days out. At this point you have about 4 months before the auction of your Denver area property. This date can be postponed for up to a year at the discretion of the lender, but they have to have a good reason to do so. Having a foreclosure avoidance program in process and under review is the most common reason for a lender to postpone auction. Some lenders have a policy of not postponing, so do not wait to take action.

Here is a list of 10 alternatives to Avoid Foreclosure. Some will apply to you and others will not:

  • Short Sale
  • Refinance
  • Bankruptcy
  • Forbearance
  • Reinstatement
  • Repayment Plan
  • Rent the property
  • Mortgage Modification
  • Deed in lieu of Foreclosure
  • Service member’s  Civil Relief Act

Click on the link for a free report I am offering called “Your First Steps to Avoid Foreclosure” that goes into more detail on each of these 10 options.

Your Plan of Action

The following are steps you can take if you are delinquent, in foreclosure, or on the verge of missing a mortgage payment on your Denver area property.

 Your First 3 Steps in the Right Direction

1. Gather financial information (bank statements and paystubs for the last 2 months).

2. Communicate with your lender that you will be seeking foreclosure avoidance counseling.

3. Contact an educated real estate professional like me to learn about your options to avoid foreclosure.

Feel free to contact me any time for more information or assistance.

 

 

 

 

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Short Sales Triple Foreclosures in 2012

Short Sales nearly tripled the number of foreclosed property sales in 2012 according to RealtyTrac spokesman in a recent interview with CNN Money. 32 percent of all residential sales were short sales while only 11 percent were bank foreclosures. A good indication that both banks and struggling homeowners are recognizing the benefits of a short sale over a foreclosure.

In a short sale the lender agrees to accept less than the full amount due on the mortgage note on the sale of a property in cases where more is owed than the property is worth. Typically, the homeowner is required to show they are dealing with a hardship that prevents them from continuing to pay the mortgage payment. This allows the homeowner to deal with everything involved in the sale of the property, saving the lender the expense and time consumed in a lengthy foreclosure process, just to be sold as a bank owned (REO) property in the end. A typical foreclosure process and resulting REO property sale costs the lender tens of thousands more dollars resulting in an even bigger loss. The short sale is a much more dignified approach to a difficult situation for the homeowner, who many times walks away owing nothing on the underwater property, and may even put a few thousand in their pocket for relocation expenses. In most cases the short sale option has a less devastating impact on their credit rating as well.

“We’re seeing fewer of the most disruptive sales, the [bank owned foreclosures], hitting the market but there are still a lot of distressed property sales,” said Daren Blomquist, spokesman for RealtyTrac. “They’re shifting to short sales.”

This also helps rebounding property values. RealtyTrac reports an average discount on bank owned foreclosure properties of 39%, while the average short sale sold for 23% below market in the fourth quarter.

One important aspect for any distressed homeowner considering the short sale option is to find an experiences short sale specialist realtor to guide them through the complex issues surrounding a short sale transaction, and negotiate effectively on their behalf with the lender(s).

 

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Foreclosures in Colorado Metro Areas down 25 Percent

According to a recent report released by the Colorado Division of Housing foreclosures dropped 24.9% in January, year over year, for the 12 major metro counties. This is the lowest rate of foreclosure activity for any January in the past seven years.

There were 1,456 new foreclosure filings in the 12 metro counties compared to 1939 January 2012. Foreclosure auction sales were down 19.1% from 1,150 to 930.

In Colorado the beginning of the foreclosure process is when the foreclosure attorney representing the lender files a Notice of Election and Demand (NED). This action establishes a foreclosure auction sale date approximately 110 to 120 days out. The foreclosure auction takes place on the county courthouse steps and is when the property is auctioned off to the highest bidder. Typically the lender places a minimum bid they are willing to accept so the majority of the properties go back to the lender at auction.

A year over year comparison of the 12 months ending in January 2013 shows the largest drop in NED filings in Larimer and Boulder counties, while Denver and Douglas counties had the largest reduction in auction sales for the same period.

There has been a lot of speculation and discussion about what the future holds in Colorado and the nation for foreclosure activity and the housing market in general, but at present it would appear we may be on the mend.

 

 
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Posted by on March 4, 2013 in Foreclosure

 

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Colorado Foreclosures drop to 2006 level

According to a report released Feb. 12th by the Colorado Division of Housing, the number of Foreclosures in Colorado was down 18.9% from the number in 2011. That is about where we were 6 years ago. There were 15,903 reported foreclosure auction sales of properties in 2012 compared to 19,617 in 2011.

There were also a reduced number of new foreclosure filings in 2012, down from 31,975 in 2011 to 28,579 in 2012. New foreclosure filings in Colorado represent how many times a Notice of Election and Demand (NED) was filed with the county Public Trustee by the attorney representing the lender on a defaulted loan.

The NED is the official beginning of the foreclosure process in Colorado, and establishes a sale date for the property to be sold at public auction. Typically there is about a 110 to 120 day period of time between the filing of the NED and the public auction date. During that time the homeowner can either cure the loan or work with the lender, housing counselors, and a short sale realtor to try to work out a loan modification, short sale, or some other method to avoid the foreclosure of their property.

The sale date can be postponed multiple times for up to a year from the initial public sale date at the lender’s discretion, but most lenders will not postpone without a very good reason. An application for a loan modification or short sale is the most common reason that might cause a lender to consider postponement. It cannot be last minute however. Typically a lender will require that all required documentation for a short sale or modification be in their system 30 – 45 days prior to the original sale date to consider postponement.

The reduction in new foreclosure filings and completed foreclosure auction sales in Colorado is definitely good news for Colorado homeowners. However, there has been some speculation about a possible new mini-wave of foreclosures coming in 2013 as a result of the 10 major banks holding back foreclosures on many properties until the recent settlement between the “mega-banks”, the Federal Reserve, and the Office of the Comptroller of Currency (OCC). It remains to be seen how our state will actually be affected by this new release of foreclosure proceedings.

 

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