Four Things You Should Know if You’re in Default on your mortgage, or about to be.
Everyday more and more Americans are at risk of becoming default on their mortgage, and simply do not know what they can do. You’ve tried contacting your lender via the (800) numbers on your bill to explain that you are not going to be able to make your payments for much longer, and want to know if there is any help. Instead of getting help, you found yourself in an endless loop on their automated system. Eventually (if you’re lucky) you were able to reach a live person who then transferred you to another, who transferred you to another, and so on, while remaining on hold for twenty plus minutes between each person. Finally, the last person you speak with tells you there is nothing they can do, and that you should try back once you’re behind.
If you haven’t already had the experience described above, here are some things you should know before going down that road.
1. No good deed goes unpunished.
When it comes to getting help with your mortgage, the majority of lender’s will not even talk to you as long as you’re continuing to make your payments. You’re mortgage company is in the business of getting as much money out of you as possible, and until you can no longer afford to make your current payment, chances are they will not want to begin reducing it.
After you’re finally behind, loan modification still may not be available to you. First of all, there is typically a 15-day grace period before your lender considers your payment late. After this grace period expires, you’re account will then go into collections. You will begin to get hounded with phone calls, and every number you call eventually will just forward you into the collections department. This department’s sole job is to get money out of you. They may even tell you that they may consider modifying your loan if you bring it current. The truth is that once you do bring you account current, the process only starts again.
Once you become about 60 days delinquent (60 days from the end of the grace period), your account will then be sent to the loss mitigation department (sometimes called Home Retention). This will be the first time you will have a chance to talk to someone who has any authority to help you. Your file will be assigned to a loss-mitigation officer who will then find out from you if you would like to keep your home or sell it.
2. You have better odds at the casino then you do in getting your loan modified
Under the federal “HOPE Now” program approved in October 2007, you are not eligible for a loan modification until you are 90 days late on every one of your bill (car, credit cards, etc.). After the 90 days, then your home will be appraised to determine if you are upside down on your mortgage. President Obama’s housing plan will only allow your lender to refinance your loan if the total amount owed is no more than 105% of the total value of your home. In Nevada, we’ve seen homes in some areas reduce in value to as much as 50% or more then what they were selling for in 2005. Unfortunately this means that very few people qualify under the housing plan.
Once you’re at this point, your lender will know there is no way to salvage this loan, and will begin the foreclosure process if you are unable to bring the account current. In Nevada, your lender will begin this process by filing a “Notice of Default” at your counties recorder’s office. This is a public notice stating that they have started the foreclosure process, and the clock starts ticking. If you are unable to “cure” the default within 120 days, which include the unpaid mortgage, all late fees, and in many cases attorney fees that were associated with the foreclosure proceedings, then they may execute their right to foreclose.
3. Don’t mistake a foreclosure with forgiveness of debt.
Many people make the mistake in thinking that because their lender foreclosed on their home, that they no longer owe on their debt. This is dangerous misconception. In the state of Nevada (check your state laws) after your lender forecloses, they may file a deficiency judgment against you. Unlike personal debt, a deficiency judgment is a personal debt and is attached to your Social Security Number. If granted, they may garnish your wages, or put liens on any other asset you may own until the judgment is satisfied.
4. What about a Short Sale.
A short sale is when a homeowner sells his house for less then what is owed, and has the difference forgiven. A lender will allow such a transaction since they will ultimately net a larger amount in a short sale then if they foreclose. When a lender forecloses, there are added costs involved that are not incurred when they allow a short sale.
Whether you immediately attempt a Short Sale, or attempt a Loan Modification, ultimately a Short Sale may end up being your only hope to avoid foreclosure. The only difference is that you may not have as much time to market your home if you’ve spent the last ninety days or more trying to have your loan modified while at the same time destroying your credit as you become more and more behind on your payments.
Although you do still loose your home in a short sale, you don’t have to live with the worry of whether or not your lender is going to file a deficiency judgment against you, you will avoid having a foreclosure on your credit report for the next seven years, and more importantly, your life can go on without this huge worry weighing down on you.
Should you have any questions or need further information,
please don’t hesitate to contact me, (775) 220-1630
Or visit my blog at www.SellingNorthernNV.com
Joshua Talayka
Chase International
Office: 775 850 5900
Toll Free: 877 922 5900
Cell: 775 220 1630
Fax: 775 850 5901
985 Damonte Ranch Pkwy, Ste. 110
Reno, Nevada (NV) 89521
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