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Tag Archives: Foreclosure help

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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Protect Yourself Against Mortgage Relief Scams

An unfortunate trend has developed involving scams by individuals as well as entire organizations, to take advantage of distressed homeowners who are already struggling and desperate to save their homes, or at least avoid foreclosure. I personally believe the main reason why more than 7 out of 10 homeowners who find themselves in financially difficulty end up in foreclosure with no assistance to prevent this catastrophe is the fact that they don’t know who they can trust. These scammers are creating confusion and compounding the situation. The good news is there are those who wish to combat mortgage relief fraud, including the Federal Trade commission.

So how do you know when you are approached by a mortgage relief scam verses legitimate assistance?

A Few Red Flags

Upfront Fees – Not only is it illegal but a certain sign that the proposed relief is fraud. Do not pay for the promise of results… if you have to pay anything at all pay only for results once the job is done.

Guarantees – Be suspicious of anyone promising guarantees. Any Iegitimate company should know the process is too complicated and dependant on many factors to guarantee results every time.

Government Affiliation – Some companies present themselves as government agencies or other authoritative entities with official looking websites ad seals, etc. Always verify the affiliation with your lender or legitimate government agencies.

Deed Transfer – Be wary of anyone asking you to sign papers transferring deed or title to your home. This can put you in a worse situation of being still on the hook for the loan and without ownership rights to the property.

Common Scams

Phantom Foreclosure Counseling – This is the most common form of relief fraud. In most cases if you avoid the Red Flag of upfront fees you will avoid this type of scam. Always check with HUD or the FTC to verify if they are legitimate.

Sale/Lease-back or Repurchase – Typically this scam involves signing the deed to the property over to a “land trust” with a promise to rent back to the homeowner until they can repurchase the home. Unfortunately, the new owner can evict, raise rent, or sell the property with little or no recourse by the former homeowner.

Fraudulent Modification – This type of scam involves a so called rescue company taking a fee to negotiate with the lender but actually just diverts the mortgage payments to themselves while the homeowner who thinks they are making payments goes to foreclosure.

So Where Can You Find Help?

The Federal Trade Commission is taking this very seriously. They issued a ruling in an effort to cut down on fraud in this area. The Mortgage Assistance Relief Services (MARS) Ruling applies to any business that provides a mortgage assistance relief services. This applies to anyone representing a plan, service, or program to assist homeowners to prevent or postpone foreclosure, or help them obtain other kinds of relief such as loan modifications, forbearance agreement, short sales, or extensions of time to cure defaults. For more information on this subject get my free report titled CAUTION: Protect Yourself Against Mortgage Relief Scams   . To view the MARS rules for individuals and companies involved in mortgage relief assistance click on The MARS Rules. To enlist help from the FTC you can visit their website http://ftc.gov/opa/2010/11/mars.shtm or to report fraud or file a complaint visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).

HUD (U.S. Department of Housing and Urban Development) also takes these fraudulent actions against Struggling Homeowners very seriously. For assistance in Colorado go to http://www.hud.gov/local/co/homeownership/foreclosure.cfm for counseling assistance or to verify the legitimacy of a would be mortgage relief person.

 
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Posted by on January 31, 2013 in Foreclosure, Helpful hints

 

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Four Things NOT to do if You Fall Behind On Your House Payment in Denver

Getting behind on your Denver Home Loan may feel like the world is coming to an end, but it’s not. However, there are several things that you should not do if this occurs. First of all, you are in good company. Around 25% of homeowners are in some stage of delinquency or under water on their mortgage. In many cases due to circumstances beyond their control. Loss of income or reduction in pay, along with a myriad of other scenarios, has contributed to homeowners falling behind on payments on properties in Denver and across the nation. So what four things should you NOT do?

1. Do not ignore the situation. This seems to be the most common response for the majority of homeowners who find themselves in this situation, and it only makes matters worse. There are a number of options available and the sooner you check them out the more options you will have. The longer you wait the fewer options you will have to avoid a foreclosure. Foreclosure should never be an option, considering the damaging ramifications to credit, possible pursuit of collections, and difficulty of getting loans in the future.

2. If you are considering selling your home, do not let an interested buyer convince you to price it far below market value. Pay attention to what similar homes are selling for in your area. A slight reduction for the distressed situation you find yourself in may be in order, but your lender will not allow you to give the home away to a buyer who wants to steal it at a price that is way below market. Be wary of these type offers no matter what they are promising you.

3. Do not give a buyer wanting to make an offer on your property the authorization to negotiate directly with your lender. There is a good chance the buyer’s primary objective will be to get the lowest price possible for your property. This approach likely will not be in your best interest. If your Denver property is worth less than what is owed it might require your lender to accept less than the amount you owe on your home loan in a short sale approval. There are certain things that need to be negotiated properly on your behalf, such as guaranteed relief from any deficiency balance (the difference between what is owed and what the property sells for). This will not be the primary concern of the buyer trying to get a deal. An experienced short sale realtor will look out for your interests in the transaction. NEVER SIGN A CONTRACT WITHOUT THE ADVICE OF A PROFESSIONAL. Consult with an attorney or real estate professional. If the situation requires a short sale, the fee for the professional representation you receive will be paid by your lender.

4. Do not deed your Denver property to anyone without making certain the loan is paid in full. Until your lender has agreed to a short pay or transfer in writing you are the one on the hook for the unpaid balance. You do not want someone else having ownership interest while you are still on the hook for the loan.

 
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Posted by on January 29, 2013 in Foreclosure

 

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FORECLOSURE ALTERNATIVES

The current U.S. housing market and national financial crisis has caused untold stress and heartache for many American families. Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to Colorado residents for foreclosure help are many. Following is a brief explanation of these solutions, including their benefits and drawbacks:

Reinstatement
A reinstatement is the simplest solution for avoiding foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

  • Benefit: Does not require the mortgage company or lender’s approval.
  • Drawback: Requires that a homeowner be able to pay all back payments, fines and fees.

Forbearance or Repayment Plan
A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

  • Benefit: Allows the homeowner to make back payments over time.
  • Drawback: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Some mortgage companies will require a homeowner to ‘qualify’ for forbearance.

Mortgage Modification
A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

  • Benefit: Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan
  • Drawback: Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

 Rent the Property
A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, is able to convert their property to a rental and use the rental income to pay the mortgage.

  • Benefit: Allows homeowner to keep property indefinitely.
  • Drawback: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance.  Requires homeowner to first acquire enough money to reinstate the loan.

Deed in Lieu of Foreclosure
Also known as a ‘friendly foreclosure’, a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

  • Benefit: Many times in a successful deed in lieu, the lender will forego their right to a deficiency judgment.
  • Drawback: Requires that a homeowner vacate the property, and a deed in lieu may be reported to credit bureaus as a foreclosure.  Most lenders require an attempt to short sale before considering this option.

Bankruptcy
Many have considered and marketed bankruptcy as a ‘foreclosure solution,’ but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

  • Benefit: Does not require lender approval.
  • Drawback: If a homeowner cannot afford their mortgage payment, a bankruptcy will only stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven years.

Refinance
If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

  • Benefit: In some cases, this will lower payments.
  • Drawback: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process.  With current guidelines it is almost impossible to refinance once payments are late.

Service members Civil Relief Act (military personnel only)

If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Service members Civil Relief Act. The American Bar Association has a network of attorneys that will work with service members in relation to qualifying for this relief.

  • Benefit: If qualified, this will lower payments on all consumer debt in addition to mortgage payments.
  • Drawback: Must be active military to qualify.

Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in the Denver area.

  • Benefit: Allows homeowner to avoid foreclosure and harvest some of their equity.
  • Drawback: In many cases today, homeowners do not have sufficient equity to sell their property without negotiating a short sale (see next solution).  If payments are delinquent homeowner and realtor are working against an increasing payoff amount with interest, fees, and penalties accruing.

Short Sale
If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

  • Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s credit record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure).
  • Drawback: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way.

This represents only a summary of some of the solutions available to homeowners facing foreclosure in Colorado. For more information on this subject contact me for a free report on this and other related subjects.

 
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Posted by on January 28, 2013 in Foreclosure, Short Sales

 

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GSE’s now agree to implement HAFA

Originally when the HAFA program was initiated by the Obama administration via the U.S. Treasury Department, the  GSE’s (Fannie Mae and Freddie Mac) refused to participate. This seemed a little strange to most of us involved in the Short Sale industry since the GSE’s are considered by most to be quasi government organizations and pretty much controlled by the government. Not to mention they control over 50 % of all mortgage activity. They have now agreed to implement HAFA with some revisions and compromises by the Treasury Department to simplify the process, but keeping the following important elements:

  1. Release of Borrower Liability – A borrower who is approved for a Short Sale under the HAFA program will not owe the amount of the loan(s) which is not recovered by the sale of the home. The borrower, therefore, will not be saddled with a Deficiencey judgement which could be collected by the investor after closing. This is a Huge benefit to Distressed Homeowners since there is an automatic Deficiency and potential Deficiency Judgement on any property which goes to Foreclosure Auction for less than the full amount owed on the property. In Colorado the investor has up to 6 years after Foreclosure Auction to pursue collection. One Very good reason to attempt a Short Sale rather than just let the property go to Foreclosure Auction.
  2. No dual tracking – The Servicer on the mortgage is not allowed to begin a Short Sale process and then Foreclose on the property in the middle of the process.
  3. One point of contact – The Servicing company on the mortgage must assign a single point of contact for the file so there is one person who is familiar with the file and can answer questions, give updates, and potentially assist in getting things moving forward when a log jam or problem occurs.
  4. Caps on subordinate lien payoffs – Having a cap on the amount a subordinate lien holder can receive from the transaction helps prevent situations where the Short Sale process cannot move forward to approval because of an unreasonable 2nd or 3rd lien holder insisting on getting more from the transaction than the first position lien holder is willing to allow. In many cases the junior lien holders would get zero if the property went to Foreclosure auction so it is a better situation for them to agree to the Short Sale plus the Treasury Department adds an incentive for them to play ball.
  5. Simplified documentation – The GSE’s insisted on a more simplified process with less documentation required. For example some documents required a signature from the borrower to acknowledge that they understand the terms of the process before the process could continue to the next step. This was an unnecessary step which could be incorporated later in the process and was easily holding things up for an additional 2 or 3 weeks.

I will go into more detail about this in a future post on this subject. Post 2 of 5 on this subject.

 

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Assessed value of Colorado property declines

According to the Denver Post http://www.denverpost.com/legislature/ci_16908034?source=rss
assessed value of Colorado Properties declined in 2010 for the first time since real estate troubles in the 1980’s, and residential properties are expected to plummet another 10.4% in 2011. In the 80’s the oil bust and the savings-and-loan collapse were blamed for the decline in real estate values. As we enter the second decade in the 21st century, the culprits are “The sustained high level of foreclosures, economic downturn and tight mortgage financing market have put downward pressure on home prices throughout Colorado” the Report said. As we work our way through the difficulties associated with high unemployment, lethargic economy, and declines in real estate values, more and more families are finding themselves in trouble on their mortgages. Many distressed homeowners find that they are not able to make the mortgage payment which they once qualified for, either because of job loss, curtailment of income, high debt, or medical issues. To boot, their property is no longer worth as much as they owe, making it difficult to even sell just to get out from under it. In some of these situations, depending on their particular scenario, the homeowner may be able to qualify for a loan modification we all continue to hear so much about. Unfortunately, according to most of the professionals who are attempting to help people obtain a modification or workout program so they can stay in their home, it is a very small percentage of borrowers who are getting the permanent solution they are looking for approved by their lenders. For the rest, a Short Sale is a much better alternative to at least avoid Foreclosure and the aftermath of life after Foreclosure. That is where we come in. As a Certified Distressed Property Expert, my first consultation with a Distressed Homeowner is designed to help them determine if their situation may qualify them for a loan modification or one of the other alternatives to stay in their home. If we agree they should try to keep their home, I have experienced professionals who will give them the best possibility of keeping their home, by assisting the homeowner in compiling all of the critical information and documentation necessary, as well as negotiating on their behalf with the lender(s). In the event that they are not able to keep the property, my team and I have a proven system and track record to successfully sell the property for what it is worth in today’s real estate market, and negotiate the short pay with their lender. A Short Pay involves the mortgage lender(s) on the property agreeing to accept less than the full principal balance of the loan, the net proceeds from the Short sale, and release the lien on the property so it can be sold to avoid foreclosure.

Read more: Assessed value of Colorado property declines – The Denver Posthttp://www.denverpost.com/legislature/ci_16908034?source=rss#ixzz199DACYoA
Read The Denver Post’s Terms of Use of its content: http://www.denverpost.com/termsofuse

 
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Posted by on December 26, 2010 in Short Sales

 

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Short Sales may become an even better alternative on April 5th

There has been a great deal of variety and unknowns in the Short Sale process as each Servicer, Investor, Mortgage Insurance company, etc. involved in the process has a different way of processing, reviewing, and approving the transaction. The timeframes and results vary from one transaction to the next,  many times even with the same lender or Servicing company.

On April 5, 2010 a new program takes effect under the Home Affordable Modification Program (HAMP), the Home Affordable Foreclosure Alternatives program (HAFA). The intent is to provide incentives to the parties involved in the process to more effectively and efficiently implement options to avoid Foreclosure,  such as Short Sales. One of the intended effects is to bring uniformity to the process so there are less unknowns, hence a more attractive option to be considered by Homeowners in Distress, Buyers, and Realtors. If they meet their objectives, the process which has taken weeks or months in the past will be accomplished within 10 days.

So what are the rules? The rules are set by the new Home Affordable Foreclosure Alternatives (HAFA) Program, which seeks to find alternatives when a borrower cannot qualify for a modification under HAMP rules, because they don’t have enough income. Both short sales and deed-in-lieu of foreclosure will be options. In a deed-in-lieu of foreclosure the homeowner turns the keys over to the bank without the need for a foreclosure and the bank agrees to accept them without seeking any funds for a short fall when the home finally sells.

If a borrower is not eligible for a HAMP modification, then the bank will use the information gathered during the HAMP process so they don’t need to do additional eligibility analysis. The borrower will get a pre-approved set of terms for the short sale before the property is listed, which means the potential buyers won’t have to wait weeks or months for an answer from the bank. The bank is also required to fully release the borrower from any future liability for the debt.

For short sale offers where there isn’t a pre-approved set of terms, banks must respond to an offer in 10 days. However, I have not been able to find anyone who is sure when that 10-day count begins. Is it when the contract is offered or when all paperwork required by the bank has been submitted? We suspect banks will find ways to stall their answers. “It’s a cumbersome process. It will take a couple of months at least, to see what the lenders will actually do with this program.
To be eligible for help under HAFA rules:

  • The property must be the borrower’s principal residence;
  • The mortgage loan must be a first lien mortgage originated on or before January 1, 2009;
  • The mortgage is delinquent or default is reasonably foreseeable;
  • The current unpaid principal balance is equal to or less than $729,7501; and
  • The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income.

 

The HAFA program simplifies and streamlines the use of

short sales and DIL options by incorporating the following unique features:

 Complements HAMP by providing viable alternatives for borrowers who are HAMPeligible.

 Utilizes borrower financial and hardship information collected in conjunction with

HAMP, eliminating the need for additional eligibility analysis.

 Allows the borrower to receive pre-approved short sale terms prior to the property listing.

 Prohibits the servicer from requiring, as a condition of approving the short sale, a

reduction in the real estate commission agreed upon in the listing agreement.

 Requires that borrowers be fully released from future liability for the debt.

 Uses standard processes, documents and timeframes.

 Provides financial incentives to borrowers, servicers and investors.

If you are in the middle of the HAMP process or have been told you don’t qualify, be sure to ask about HAFA alternatives for help in getting out of your loan obligations.

 
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Posted by on April 4, 2010 in Short Sales

 

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