Deed in Lieu vs. Short Sale

I was just reading some other foreclosure blogs and websites out on the www and was struck by one blog that gave home owners the advice to do a deed in lieu (also known as a friendly foreclosure) with their lender instead of a short sale. I would have to disagree. If you are going to loose your house, don't just go down quietly! Whether you do a deed in lieu or have your home foreclosed on, I hate to break it to people, but the resulting damage to your credit will be the same. You will have a FORECLOSURE on your credit report, and every time you try to apply for a loan you will have to check that box that says "yes" next to the question "Have you ever been foreclosed on?" You are also saving the bank the time and expense of having to go through the legal steps they must take to foreclose on your home. In a deed in lieu situation, you fore go all of your legal rights and just hand the bank your home. They other thing that is happening now is that banks do not want your home, they want MONEY! They are so over loaded with unwanted homes that they will not even take a deed in lieu, they would rather you attempt to sell the home. If you attempt a short sale, and are successful, you may be able to save yourself from the foreclosure on your record. You will still have the late payments, but not the foreclosure, so really if you are going to lose the home anyway why not go down fighting for your rights?

If you have questions or would like more info please comment here or send me a fast response form on my website http://www.easyhouseinfo.com/

Homeownership Preservation Initiative Program Chicago

If you are struggling and need help this is the program I wrote about earlier that you can contact through the city's non-emergency 311 program.

Homeownership Preservation Initiative Partnership
For more information, contact: Michael van Zalingen
(773) 329-4010

Launched in 2003, Chicago’s Homeownership Preservation Initiative (HOPI) program, under the city’s Neighborhood Housing Services department, is a partnership working to help homeowners avoid foreclosure.

Chicago homeowners at risk of foreclosure can contact HOPI through a 311 hotline, through community-based partner organizations, or be referred by their lenders.

HOPI utilizes several strategies to assist homeowners: face-to-face counseling along with loans to bring borrowers current or help with property repairs; phone-based foreclosure services through the 311 hotline; and partnerships with loan servicers to hold neighborhood-based mortgage workshops.

More information is available online at www.nhschicago.org.

Short Sale Expert who can really help homeowners!

I have been speaking with a woman who is a true expert with short sales and credit repair for distressed homewoners.

Her name is Maureen McDonald and she has two fabulous systems to help homeowners get out of foreclosure and get a fresh start by repairing their credit and finding them new homes and maybe even some grant money to start their new lives.

You can reach her at 708-870-1368 or Re7day@yahoo.com.

Her credit repair site is:

http://sccs.helpnow.tripod.com/


Please get in touch with her and see if she might be able to help you out! Her specialty is stopping foreclosures that are close to auction and she is GREAT!

Tips for Avoiding Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

This is some helpful information from HUD!


Don't ignore the letters from your lender
Contact your lender immediately
Contact a HUD-approved Housing Counseling Agency
Toll FREE (800) 569-4287
TTY (800) 877-8339

If you are unable to make your mortgage payment:

1. Don't ignore the problem.The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options.Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at
portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL

6. Contact a HUD-approved housing counselor.The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets. Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies. You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.

10. Don't lose your house to foreclosure recovery scams!If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

Home Ownership Preservation - Foreclosure Prevention

The following information was taken from the City og Chicago's website. It gives some information on a program the city is funding to help homeowners. All the homeowner need do is call 311 and ask to speak to a counselor about avoiding foreclosure.



BackgroundThe Homeownership Preservation Initiative (HOPI) is a partnership between the City of Chicago, Neighborhood Housing Services of Chicago, and key lending, investment and servicing institutions doing business in Chicago. The partnership seeks to preserve homeownership whenever possible and keep families in their homes through counseling, loss mitigation and loan workouts. When foreclosure is unavoidable, the partners seek to preserve the vacant properties as neighborhood assets.

Three-Year Goals:

Homeownership Preservation: Help 1,500 homeowners avoid foreclosure Help 500 homeowners per year avoid foreclosure through loss mitigation efforts, including loan workouts, refinancing, loan modifications, repayment plans and small loans to bring homeowners current on mortgage payments.

Property Preservation: Reclaim 300 vacant, foreclosed propertiesNHS, through cooperation with lender partners and the Department of Housing, will acquire 100 foreclosed single family buildings per year over three years, rehab them to safe and habitable condition, and sell the homes to low and moderate income families.

311 Homeownership Preservation CampaignTo expand efforts to reach homeowners at risk of foreclosure, the City of Chicago has developed the 311 Homeownership Preservation Campaign. The 311 Campaign will encourage homeowners to call 311 at the first sign of mortgage delinquency. Callers will be connected with one of three credit counseling agencies affiliated with the Credit Counseling Resource Center for a free one-hour counseling session.

The counseling agency will:
Provide an in-depth assessment of the homeowner's financial situation and an individual action plan.
Serve as a liaison between the homeowner and the mortgage company, where appropriate, to advocate for a repayment plan, loan modification or other loss mitigation strategy that will help the homeowner avoid foreclosure.
Provide referrals to local resources, where appropriate, for job training, tax assistance, emergency grants, and foreclosure prevention classes.

Questions about the Program:

How does the counseling session work? The 311 Operator will connect you with a not-for-profit, accredited housing counselor. The counseling session will take place over the phone and is completely confidential. The counselor will gather information from you about your financial obligations and work through your options for avoiding foreclosure. If appropriate, the counselor will help you contact your mortgage lender and negotiate a repayment plan.

How long does the counseling session take? You should be prepared to spend at least 45 minutes on the phone with the counselor. If you are not able to participate in a counseling session right now, you should call back as soon as you have time available. I'm not in foreclosure now, but I lost my job and am afraid I won't be able to make my mortgage payment.
Can I participate? Yes! The counselor can help you establish a budget to get through the next few months.

Are there grants available? Depending on your particular financial and family situation, there may be low interest loans or emergency funds available. The only way you can determine the best options available to you is by speaking with a housing counselor. Is there a cost for this counseling? The counseling is being provided free of charge to callers. The City of Chicago and participating lenders are funding the program.

5 Steps you can take early in the foreclosure process.

1. Call your lender.This is the single most important thing you can do. Lenders want borrowers, not properties – they would prefer to see you keep your home. Most will work with you while you get back on your feet.
2. Be honest with your lender.Different situations require different solutions. It will matter to your lender to know if your financial problems are temporary, for example, due to an injury that puts you out of work for a few months, or are more long term, such as a cut in pay or a layoff.
3. Know what you owe.Have a clear picture of what your debts are and make your mortgage the priority if you have to make choices. Debt collectors can be very aggressive, but if you can't pay all your debts, make sure your home is protected from foreclosure by paying your mortgage.
4. Talk to a housing counselor.A non-profit housing counseling agency may be able to help you restructure your bills so that you have an easier time paying them. Additionally, they can help you create a budget that suits your specific needs.
5. Contact a housing non-profit.A housing non-profit can give you valuable advice. The HOPE National helpline, 888-995-HOPE, is dedicated to helping homeowners facing foreclosure 24 hours every day. Spanish – speaking counselors are available.

Timeline of a foreclosure.

So many people have no idea what is happening in a foreclosure and when it happens, so I will try to break it down for you. In Illinois, which is a judicial state, it is a rather long process.
When you miss your first mortgage payment the bank starts to keep track. After you are 90 days behind they can legally start the process.

The first thing that they will do is file the lis pendis or legal notice. This is when the timeline officially begins. Once you are served the foreclosure petition you have 90 days to reinstate your loan by paying out all back payments, taxes, attorney fees, late charges, etc.

Keep in mind, many banks are being more lenient and will work with you to do a modification or something other than taking the home back from you in the foreclosure. Don’t be afraid to ask!
As a borrower in Illinois you have the right to redeem the property within 7 months from the date the lis pendis was filed, or 3 months after the date the judgment was entered by the court (that is the second court date).

After the redemption period ends the next court date (number 3) is when the lender’s attorney ask that a sale date be set. Once set, the lender has to publish the sale 45 days prior to the sale. Then one more time during each of the next 3 weeks (4 total).

After the sale is complete, there is a 10 day confirmation period where the court finalizes the sale. Thirty days after the sale date the buyer is able to take possession of the property.

Well, that about sums it up. There are a minimum of 7 months in the Illinois foreclosure process, and it could take longer depending on the bank.
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Mortgage debt cancellation relief. Who qualifies?

Mortgage debt cancellation relief. Who qualifies?

What is mortgage debt cancellation relief and who qualifies for it? It is a law that will protect individuals and families who have had a foreclosure or a short sale on their primary residence (you must have lived there for 2 of the past 5 years) between January 1, 2007 and December 31, 2009 by eliminating your requirement to pay taxes on the forgiven debt. In layman’s terms it means that the bank cannot file a 1099 on you for “earned income” on what ever amount they lost on the transaction. Previously, homeowners were required to pay the taxes on this “phantom income” and that had caused even more hardship.

There are a few guidelines.

• There is no income limit. All borrowers receive the relief, no matter what their personal income.
• The amount of debt eligible for forgiveness is $1 million per person.
• Relief will only apply to an individuals principal residence (you must have lived there for 2 of the last 5 years.)
• Eligible debt is what is called “acquisition indebtedness,” This is debt used to acquire, construct or rehabilitate a residence. (If the money from a second mortgage or home equity line of credit was used to improve the home you need to have adequate proof to this end.)
• No relief is available for cash-outs, whether the cash-out takes the form of a refinanced first mortgage, a second mortgage, home equity line of credit or a similar arrangement. (An exception of refinanced debt is when the refinanced portion does not exceed the original amount borrowed.)
  

Basically, this is meant to drastically reduce or eliminate any tax consequences for borrowers on their own homes. For people who purchased second homes or used their HELOC (home equity line of credit) for things other than home improvement projects, you will not qualify, but there may be other things that your tax professional can do to help you.

How will a short sale affect your credit?

Many people think…”That if I’m going to lose my house and I’ve messed my credit up so bad what’s the point of trying to do a short sale? I’ll just let the bank have it!”
Well the answer to that is a possible difference of an extra 200 points off your credit score if you have a foreclosure or deed in lieu versus a short sale on your credit history. A short sale will also allow you to bounce back and qualify for a mortgage a lot sooner than a foreclosure or deed in lieu. A foreclosure will take 280 to 300 points off your credit score! That means that if you start off with a credit score of 650 then you could end up with a score of 350!!!! Ouch! A short sale typically takes off 80-100 points. That means that the same 650 credit score will be taken down to 550. A huge difference! You will be more quickly able to qualify again for a mortgage, usually within 18-24 months after a short sale. In the case of a foreclosure it will take 24-36 months before you may qualify again.
So, what’s in it for you is a faster recovery and getting on with your life sooner!
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