What to do if you are going into Foreclosure

In terms of saving a house from foreclosure, defending the lender's lawsuit in court may be one of the most effective ways of going about this. Banks can easily become frustrated at the slowing down of the legal process and are more open to settling the matter out of court. Hiring a competent attorney may allow borrowers to negotiate a resolution to the foreclosure that benefits all parties involved.
Even without using new or creative defenses to foreclosure, such as a produce the promissory note strategy or a Jerome Daly defense, homeowners can gain the upper hand in the legal system simply by having an attorney attempt to delay the sheriff sale for as long as possible. Every motion filed with the courts will have to be given attention and a potential hearing, all of which delays the bank's ability to take the home and increases the costs of litigating the foreclosure case. Lenders that are already faced with hundreds more foreclosures this year than last year do not want to spend additional time and resources fighting borrowers.
The benefit of hiring an attorney to file such motions to delay the public auction really comes in the form of a stronger negotiating hand in dealing with the bank. Most foreclosure victims simply roll over and let the mortgage company foreclose with no objection in the courts; in fact, banks and lenders' attorneys count on this when initiating the proceedings, hoping for a quick lawsuit and property auction in order to begin regaining losses on the loan. Borrowers who are represented in court by a competent lawyer show the bank that it will cost much more to go through with the lawsuit than simply to settle the matter in some more beneficial way.
Of course, before the bank even gets to the lawsuit portion of the process, homeowners should attempt to work out a mortgage modification or other plan to get the loan back on track. But if the lender does not cooperate with these types of negotiations, then it should not expect the borrowers to cooperate with the foreclosure lawsuit and simply give up the house with no fight. Defending against the court proceedings may be a last resort, but it can be a most effective one for forcing the bank to come to the negotiating table.
There are several different settlement options that homeowners may bring up, as well, depending on the financial circumstances they are currently in. While asking for another chance for a repayment plan is one option for borrowers who can continue to make their payments, those who can not save their homes but wish to avoid the most negative consequences of foreclosure can also negotiate with mortgage companies. All the bank will be offered in return is that the lawsuit defenses will stop and maybe that the owners will keep the property in good condition until ownership is transferred to the bank.
For instance, these types of borrowers can require the bank not to pursue a deficiency judgment after the house is sold, or to accept a deed in lieu of foreclosure instead of pursuing the sheriff sale at all. Another option is to have the bank auction the property for its market value, which will preclude any taxable forgiveness of debt. Borrowers can also ask for extra time, from a few weeks to a month, to stay in the house and move out peacefully, or even request a cash for keys deal in which the bank pays them to move out of the home without causing any damage.
In fact, the types of negotiations homeowners can enter into with lenders are nearly infinite. But none of this can be done without mounting the initial legal defenses in court, or else the bank, its attorneys, and the judge will most likely ignore the borrowers and push the foreclosure forward. This is why understanding the foreclosure process and hiring a competent legal counsel may ensure the best chance for finding a way to stop foreclosure, or at least avoiding the worst financial and credit consequences of defaulting on a mortgage and losing a home.

Short Sale Info

A short sale in real estate is not always a pleasant transaction.
There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."
When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.
If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:
Obtain legal advice from a competent real estate lawyer
Call an accountant to discuss short sale tax ramifications
As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.
Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.
Call the LenderYou may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.
Submit Letter of AuthorizationLenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
Property Address
Loan Reference Number
Your Name
The Date
Your Agent's Name & Contact Information
Preliminary Net SheetThis is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
Hardship LetterThe sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
Proof of Income and AssetsIt is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
Copies of Bank StatementsIf your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
Comparative Market AnalysisSometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:
Active on the market
Pending sales
Solds from the past six months.
Purchase Agreement & Listing AgreementWhen you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.
Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.

Here at Greco Title we have professionals here to assist you in all of your Short Sale needs. Feel free to contact us any time and we will work with you to solve your problem.
586-463-7200

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