Short Sale

Archive for the ‘Foreclosure’ Category

Question: How does a home Foreclosure process work?

If someone with an A paper loan goes into Foreclosure because their home is worth less than half the value of the mortgage therefore bank does not approve Short Sale, and they lost their job, how does the home Foreclosure process work? This would be for CA. And how long does such home Foreclosure stay on the credit report and would existing credit card rates go up?

Answer: At this point it doesn't. Most lenders have suspended Foreclosures and Short-Sales. The rest will follow. That is to give the President time to hammer out details of The Foreclosure Rescue Act. Its all over the news.

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Question: Where can we find help for foreclosures issues? And what is Obama doing to help Foreclosure victims?

My parents recently lost their home to Foreclosure and now they are planning to file for bankruptcy. They recently went to file their taxes and they found out that the IRS is billing them $52,000 for abandonment even though they have tried for months asking for help from the banks. Need some advise on how I can help guide my parents to the right people to settle the foreclosures.

Answer: What people do not understand is that if/when a property is foreclosed on, the borrower does not simply walk away with a Foreclosure on their credit. At the beginning of the following year they get a 1099 and have to claim the banks loss as an income and then pay taxes on it. The IRS billing them is understandable, especially if they had unpaid taxes and the IRS placed a 2nd lien against the property.

The other thing that people forget is that the borrower may ask banks for help, but they have to qualify for it. Investors are not 'handing' the bank to people because they need help - they have to qualify by showing they can afford a lower payment/interest rate. If they do not qualify this way, or if there are 2nd liens on the property - often the banks hands are tied because the collateral can be foreclosed on by the other lien holder(s) and the risk of loss all the way around is to great.

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A foreclosure is very hard on a homeowner. No one wants to be foreclosed on but usually it is unavoidable when a homeowner does not have enough money to pay mortgage payments and other bills. Usually, a foreclosure is a result of the homeowner's:

• loss of jobs,
• excessive and unforeseen medical bills,
• divorce
• death in the family
• mortgage payments increasing because of rising interest rates
• and many other reasons

Sometimes, a family is evicted even when they themselves have not missed a single payment but their landlord has and is now in foreclosure.

How to stop a foreclosure?

There are usually signs of financial trouble before a family is not able to pay bills or mortgage payments. Fortunately, banks usually do not foreclose when a payment is missed so a family usually has some time before they even receive a notice of default or a notice of foreclosure.

If detected early, there are plenty of options that a family can take to avoid foreclosure. For example, the family can sell the home and repay the bank, refinance, modify the loan or start a Short Sale process.

This Short Sale website provide tools and resources to help families who are facing foreclosure or know that they cannot afford to keep up with their mortgage payments.