| THREE
MOST COMMON WAYS TO HANDLE FORECLOSURE |
1.
Cure the loan default
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Pay the lender what they are owed (borrow money)
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Deal with the lender directly and arrange for a forbearance
payment plan or
loan modification
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2.
Sell your home (yourself or with a Realtor)
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This option takes time
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You have a minimum of 111 days from the first filing of a
“Notice of Default” before your home can be sold at Public
Auction
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3.
Declare Bankruptcy —your last resort
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This is often a temporary solution and may or may not save
your home from a foreclosure sale. Contact a bankruptcy
attorney for legal advice
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STAY
IN YOUR HOME
Phase Nine Investments specializes in developing
plans that allow you to STAY IN YOUR HOME and avoid foreclosure,
bankruptcy, etc. These can include developing a partnership,
lease-backs and other proven methods. |
QUICK
CASH
Another option may be for you to sell your home
for QUICK CASH. This may include Phase Nine’s team of experts repairing
or upgrading it for maximum sale value —with no up-front cost to the
home owner. There are many alternatives to consider. |
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IMPORTANT
NOTE:
o all that you can to postpone the recording
of the Notice of Trustee Sale. This recording reduces you borrowing ability,
sets a deadline for resolution, and adds fees and costs. Talk directly to the
bank, as the Trustee managing the foreclosure sale gets their instructions
from the bank. It is the bank that will make decisions about your future
—not the Trustee. Attempt to go on a payment plan (forbearance) or do a loan
modification, and stay with your current lender if at all possible. |
FORCLOSURE
SALE DATE SET
With a Trustee Sale pending,
the need to act quickly cannot be stressed enough.
Now is the time to think “out of the box” and look
for less traditional, creative options. Within the
last five business days the lender may demand 100%
of all money that you owe. Waiting until the lender
demands that you pay off the loan completely will
compromise your ability to employ alternate solutions.
Phase Nine has a proven track record of moving
quickly, and has the ability to put a deal together
without an escrow if needed and circumstances permit.
We can make things happen —FAST! |
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5 Points to
Remember
- Act Early
The
clock is ticking—after a lender files a notice
against you, you will have a set period of time before
your house goes to sale. The earlier you act during
this timeline, the more options you will have and the
better outcome you will receive. Don’t be an
ostrich—recognize your situation and act quickly.
- Educate Yourself, Make a Plan
To be able to act early,
you will need to educate yourself on your options
and on the current housing market. We list 5 Options
below, and it is imperative that you find out as
much as possible about these different options
and how they apply to your situation. You do not
want to lose thousands of dollars because you are
unaware of resources available to you—get
smart about the decision facing you.
- Keep in Contact with Your Lender
Lenders are not in the business
of owning homes—they are in the business
of making money on notes, and quite often will have many programs designed for
people in your situation. Calling your lender and gaining a primary contact will
allow you to keep the communication channel open and ensure that you receive
no surprises as the process moves forward.
- Try
and Understand the True Equity of Your Property
Your options will vary depending upon how much equity you have. However, even
in a situation where you have no equity, you may still have options. The key
to understanding the true equity of your property is to first come up with an
honest assessment of the total debt by totaling the full payoff of all the loans
and liens on the property, including any property taxes, back payments or pre-payment
penalties. Then, you must assess the value of the property, usually by comparing
the recent sale values of comparable properties in your neighborhood. Then, you
subtract your total debt from your estimated value, and you have the equity of
your home. Remember, if you sell through a realtor, the true equity will be your
current equity minus all realtor commissions and closing costs, which typically
range from 6%-9% of the total value of the property.
- Save
Your Credit
Our society
is based on credit—foreclosure
or bankruptcy can ruin it, and can stay on your
credit history for 8 years or longer. Foreclosure
is one the worst things to have on your credit
report—it will prevent you from getting credit
cards, buying cars, buying homes and more. It is
imperative that, during this time of difficulty
and stress, you have a clear idea of what you would
like your future life to be, and that you protect
your credit by making sure that your property does
not reach the foreclosure sale.
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- Re-Finance Your Current Loan
If you
have significant equity and the ability to make new
payments (typically at a higher monthly), you can
sometimes re-finance. There are many options and
packages available from lenders to help, but you
must watch out for lenders who are not familiar with
properties going to foreclosure, as many times they
will take too long to process your new loan and you
may lose the property to sale. If you decide to re-finance,
make sure you work with a lender who specializes
in properties in danger of going to foreclosure,
and make sure you are careful to not agree to lines
of credit or new payment structures that you cannot
afford.
- Complete a Work Out with the Bank
If missing payments
was a one time thing and you feel you
can make them going forward, you may
be able to create a work out plan with
the bank. Also know as a forebearance
or loan modification, the work out plan
will quite often spread the back payments
out over a period of time, thereby increasing
your monthly payment but bringing you
out of the foreclosure process. However,
be cautious—if the circumstance
that led to your first default still
exist and you are not able to make the
payments of your work out plan, the lender
will quickly begin the foreclosure proceedings
again, starting up from where they postponed
it the first time.
- Borrow Money from a Loved One
You can stop the foreclosure
process by bringing the loan current and paying off
all back payments owned. Typically, you will need
a chunk of cash to do so, and borrowing money from
a loved one quite often can bridge the gap in a tight
situation. However, be advised that you will still
have to make your monthly payments, and you do NOT
want to put your loved one’s money at risk
by bringing the loan current only to default on it
again in the near future.
- Sell Through a Realtor
If you are in a
hot housing market and you feel your
property would sell quickly, you may
list your house with a realtor. However,
there are many drawbacks to working with
a realtor during the foreclosure process.
First, realtors typically move much slower
than your foreclosure timeline, and often
there is not enough time to find a qualified
buyer and close escrow in time to save
the property from foreclosure. Also,
realtors will take between 5%-6% commission
on the sale price, thereby robbing you
of a significant portion of the equity
in your home. Another thing to remember—realtors
will typically ask you to sign a contract
that gives them exclusive rights to sell
the property, and this is a bad thing
for someone in a foreclosure situation.
You will want to be able to act quickly
on ANY offer you receive, so if you do
list with a realtor, make sure you get
an option clause in your contract with
them, which allows you to sell the property
on your own if need be.
- Sell to a Real Estate Investor
There are many companies and individuals, ourselves included, that
buy properties every day directly from homeowners. By cutting out
the realtor, we are able to save homeowners the commission and
closing costs, and can typically close as quickly or slowly as
the homeowner needs or wants. Investors will quite often also have
a host of services that can help ease a transition, from
credit repair and relocation services to quick cash and saving
of your long term credit history. However, there are many vultures
in the investing world, and it is crucial that you work with a
Real Estate Investor that is up front, honest and will give you
a fair price for your property.
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