Foreclosure Defense Secrets.com

1. The Law- This is the #1 tool any homeowner can use to fight back against their lender or servicer. Unfortunately it is the most over looked and under utilized weapon by homeowners in avoiding foreclosure. Any foreclosure prevention service company (whether it be for profit or non-profit) that is not utilizing the all important legal layer in the homeowner loss mitigation process is actually maybe causing more harm than good to the homeowner. Their attempts to be of service to a struggling borrower, may actually be causing a disservice because they need to use the law.

The facts are that there was a lot of fraud and predatory lending perpetuated in the lending industry over the last 5 plus years and now we are seeing the results of that reckless and unlawful behavior with our current foreclosure crisis. You may be the victim of fraud or predatory lending and in some cases, both. Knowing the intricasies of mortgage law can assist you and help you identify if you are in fact a victim of predatory lending. The Truth in Lending Act and RESPA federal laws and various state laws can serve as protection and as a tool to stop foreclosure.

The best weapon in fighting against a foreclosure is the law, provided that you know how to use it to your advantage.  Learn how to use the law at www.ForeclosureDefenseSecrets.com.

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2. Loan workout - A loan workout is a broad term used in the loss mitigation arena to describe the negotiation with your lender of any kind of plan that will benefit both you and the lender when you are delinquent or in default of your loan.  The term can be used to cover the different “workout” options you may have such as a loan modification, repayment plan, short sale, forbearance plan, etc.

Aside from a full loan modification, a loan workout is usually a temporary solution to a more permanent problem.  For some, the problem is that the house they currently own is worth way less then they owe on it.  For others, the problem is that the monthly payments they are being asked to make are just way too much for them to afford.  Whatever the problem is, a loan workout will stop the foreclosure process until the next time a payment is missed.

Loan workouts are a very valuable tool in foreclosure defense and are deadly to the bank’s ability to take your home, if they are used properly.  Learn how to use loan workouts, and other techniques, to stop the foreclosure of your home at www.ForeclosureDefenseSecrets.com.

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3. Loan Modification- This term has been getting a lot of attention lately and rightfully so. With millions of homeowners stuck in toxic adjustable rate mortgages and no ways to refinance out of them, loan modifications may be the only way to assist struggling borrowers. This term is used when your lender modifies your current mortgage (same loan you have, only changes are made to the note) in order to work with you and make your mortgage more affordable. A modification to your rate, balance of loan, delinquent fees owed, term of loan etc. can be made at the “discretion” of your lender. In the past this was only used when a borrower was delinquent but now we will see it being used before someone is delinquent. This will be the hottest term and the best way to help people avoid foreclosure.

Clearly a modification, especially one in which the principal is lowered, is the goal of 99 percent of all homeowners facing foreclosure, but getting one isn’t always as easy as it sounds.  Sure, the HAMP plan instituted by the Federal government provides for payments to not exceed 31 percent of a borrower’s monthly salary and locks in the interest rate at 5 percent, but that doesn’t mean that the foreclosure process will stop long enough for you to negotiate one.  Learn how to slow the foreclosure process to a halt at www.ForeclosureDefenseSecrets.com.

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4. Forbearance- This is used most of the time, when a Notice of Default has been filed. You are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions.

A forbearance agreement is usually referred to as a stipulation agreement.  The terms of a stipulation agreement require you to waive all defenses to the foreclosure action and for you to make six or more monthly payments of higher than your previous mortgage amount in order to be considered for a loan modification.  I do not recommend entering into a stipulation agreement unless you are happy with the terms of your current mortgage, but had previously fallen on hard times.

For more on how to avoid foreclosure, visit www.ForeclosureDefenseSecrets.com.

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5. Short Sale- Here is another abused tactic that is being pushed on homeowners by over zealous real estate agents (not all agents are like this) that profit from the sale of your home. Bottom line is that if you want to save your home, then this should be one of the last methods you utilize in the loan workout process. If you do not want to save your home and you have resigned to the fact that you are way in over your head, then by all means, find an experienced short sale agent (not just any real estate agent, but one with a proven successful track record)  to assist you in dealing with your lender and getting your home sold.  

A short sale is primarily used when all negotiations for a loan workout have failed and you are upside down on your mortgage, meaning you owe more on the mortgage than it’s worth. The lender basically agrees to cooperate in the sale of your home and take a loss. You place the home for sale and any offers that are obtained will be presented your lender. Unlike a traditional real estate sale when the homeowner decides what offer to accept or not accept. Your lender will control the negotiations and you will not be involved in the contract negotiation of the sale of your home.

Many lenders are severely back logged in their short sale departments. Many are simply not cooperating and making everyone’s lives very difficult. Remember they are now debt collectors and you owe them money on a contract and they plan to collect on that.  They will not voluntarily stall the foreclosure process to allow you the time to complete a short sale.  For information about getting all the time you need and stalling the foreclosure indefinitely, visit www.ForeclosureDefenseSecrets.com.

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6. Foreclosure Bail Out Loan – Is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage and it is common for interest rates to approach 10-15%. Points can be as high as 5 and terms are usually short. In the 5 year range where a balloon payment will be due for the remaining balance. In order to qualify you must have sufficient equity. Hard money lenders are looking for 65-75% max loan to value and a decent equity cushion. You also have to have ability to repay as in a traditional mortgage.

Hard money lenders are more difficult to find in such an unstable market, but they still exist.  While a foreclosure bail out loan may not be a permanent solution, it can definitely buy you enough time for your economic situation to change or for the housing market to recover just enough for you to sell your house and pay off the loan.  Learn more about how to avoid foreclosure at www.ForeclosureDefenseSecrets.com.

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7. Deed-in-lieu - is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. 

The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure.

Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy. In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred.

Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower. Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.  Learn more about deeds-in-lieu and other ways to save your home from foreclosure at www.ForeclosureDefenseSecrets.com.

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Over the next week, I will be counting down the eight best ways to avoid the foreclosure of your home.  Today, we start with a discussion of Bankruptcy, since that is the very last resort for anyone facing foreclosure.

8. Chapter 13 Bankruptcy- As of the date of this writing, the federal bankruptcy courts do not have the authority to restructure mortgages. However, this seems to be a popular method that is being used by homeowners and attorneys to delay foreclosure on their home. This is primarily used as a “stall” tactic and is not a “cure” all for your mortgage problems. In some cases Chapter 13 bankruptcy filings are being abused and portrayed by some bankruptcy attorneys as an effective way to “stop foreclosure” when in fact it is only and effective method to “delay foreclosure”.

In order to qualify for Chapter 13 bankruptcy you will have to have a steady income.The bankruptcy petition would need to be filed before the sale date of your property. After filing, you will propose a plan to repay the amount you fell behind on the mortgage. You will also begin to again pay your regular mortgage payments, which under the operation of law must be accepted by your mortgage company.

 A forced loan modification (non-mortgage) can be sanctioned by the courts if it is proved that the borrower cannot afford the current payments. The concept is similar to debt consolidation, but it permits you, the consumer(s), to pay unsecured debt down without accruing interest (student loans are an exception) and without having to deal with those annoying calls from debt collectors.

Under a typical plan, you make monthly payments to a court appointed bankruptcy trustee for generally three to five years. The amount of your monthly payment is determined by several factors such as the amount of debt you have, your ability to repay and the extent that you have assets. In exchange for stopping any and all collections activity, one proposes to pay all or, in specific circumstances, a portion of the debt through a Chapter 13 plan. The filing of a Chapter 13 bankruptcy stops ALL collection activity though something called the automatic stay. The automatic stay remains in effect during the life of the case unless the court orders otherwise.

You can always refinance or sell your home while under Chapter 13 if you wish to pay off the bankruptcy and move on with your life. The Chapter 13 stops the foreclosure immediately.  Learn more about how to stop the foreclosure of your home at www.ForeclosureDefenseSecrets.com.

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As the number of foreclosures continues to grow, so do the number of vacant houses in your neighborhood.  With no one to care for these houses, the lawns become overgrown, insects and rodents take up shelter in the yards, vagrants who act as squatters become your neighbors, pools grow algae, and assessments go unpaid.  These results directly affect the property value of all the homes in the neighborhood and make it nearly impossible to sell your home.  The only way to stop the cycle from continuing is to stop the foreclosures from occurring.  If you, or anyone you know, is facing foreclosure or having trouble making their mortgage payments, be sure to refer them to www.ForeclosureDefenseSecrets.com and stop the foreclosure crisis from hurting us all.

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The banks have realized that they would rather not have to foreclose on a property. They have learned that each delinquency and foreclosure is costly to administer, with a typical foreclosure estimated at $60,000, or about 20-25 percent of the loan balance (legal fees alone can cost $4,000), and those costs are expected to be even higher in times of home price depreciation. Banks already have an overwhelming number of properties in foreclosure, and they are finally recognizing their need to accept loan modifications via their loss mitigation departments.  The best time for Loan Modification is now! 

The time has never been better for consumers (who own homes) to take action and request that their loans be modified towards better terms and a lower interest rate. Moreover, with these new economic realities, a loan modification may be the only way for a homeowner to save their home.

Recently, large numbers of homeowners have been trying to complete “loan workouts” or loan modifications with their current mortgage lender to lower the interest rate and improve the terms of their loan. They have learned that negotiating with the bank for a modification of their home loan can be an overwhelming process. Major lenders such as Countrywide bank, Indy Mac bank, Wells Fargo, Bank of America, WAMU, New Century, Quicken Loans, Aurora, Aegis, EMC Mortgage, CITI Mortgage, Chase Bank, are inundated with defaults and foreclosures. Numerous calls, hours of time, repeated delays, transfers from one department to another, voice mails, faxes back and forth.  In order to complete the loan modification, you need to be able to stall the foreclosure process indefinitely.

Stop Foreclosure - It is the most important decision of your life. 
          - Foreclosure is AVOIDABLE. Modify your loan now and keep the roof over your head.
  - Foreclosure is a CHOICE, not an inevitability. Modify your loan now and avoid foreclosure.
  - You DON’T have to settle for foreclosure. Avoid it with a loan modification now.

Learn how at www.ForeclosureDefenseSecrets.com.

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