Renting A Home In Foreclosure? New Rules May Protect You From Eviction

With the increased numbers of homes falling to foreclosure, there are many non-home owners across the country who are increasingly suffering from anxiety related to their housing; these tenants are the renters of homes in foreclosure.

A number of renters across the nation have been the victims of unscrupulous lenders or real estate agents who see them as a roadblock to a home sale. Due to the lack of communication surrounding the new Protecting Tenants at Foreclosure Act passed last spring which allows most renters to stay in a foreclosed home for a period of time after foreclosure, some renters have been pressured out of homes which they have every right to keep residing in.

The new laws allow a renter with a lease to stay in the home for the duration of the lease when a home is foreclosed on. The renter may be able to renegotiate their lease after the contract runs out, but there is no guarantee. For renters who are renting on a month to month basis, there must be 90 days before they are required to leave the premises.

For renters who have a lease, there is still the problem of when a foreclosed home is sold to a buyer who wants to live in the home as a primary residence instead of renting it out; in this case, even with a lease, the owner may legally present the renters with a 90-day notice to vacate.

These new laws, while actively in effect, are apparently unknown to many renters across the nation. Some of the property management companies who collect rents on these homes may not be all that proficient with the new rules laid out in the Protecting Tenants Act either; some tenants have had their rent checks refused, their leases deemed ‘illegitimate’, and their lives disrupted.

It just proves the point that many renters need to consider when they feel like their rights might be getting quashed; research your rights and responsibilities so that you’re aware of what is or is not acceptable and legal. It is an even better idea to research renters’ rights before you enter into a rental agreement in the first place as there are a lot of laws regarding these types of contracts that have been around for a long time but that are still often misunderstood by many people.

By: Todd Levinson

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Government Housing Assistance

Public housing assistance, housing vouchers and subsidized rental accommodation are a few government housing assistance programs that are meant to provide safe and decent accommodation to low income families, people with disabilities, veterans, seniors and the homeless in a quest for a better life.

Most of us are aware of the assistance being provided by the government for the purpose of preventing foreclosures. As a part of the Making Home Affordable Program, the govt. is modifying mortgage payments and helping eligible homeowners refinance their home. The article, “Government Help to Stop Foreclosures” deals with foreclosure assistance in great detail. In addition to helping financially distressed homeowners, the govt. is also providing housing assistance services to low income families, veterans, homeless people, seniors and people with disabilities. The following government housing assistance programs are intended to help people from becoming homeless.

Low Income Families
The HUD’s (U.S. Department of Housing and Urban Development) Housing Choice Voucher Program helps low income families lease or purchase safe, decent, and affordable privately owned rental housing. The HUD also administers Federal aid to local housing agencies (HAs) to help the latter provide affordable, safe and decent public housing to low income families. The number of families living in 3300 HA managed public housing units is around 1.2 million. Moreover, landlords are given incentives, by the HUD, to encourage them to provide privately owned subsidized housing to low income families. The article on “Assistance for Low Income Families” has further details regarding nutrition programs, financial, legal and medical assistance for low income families.

Veterans
The Federal Housing Administration (FHA) and the Veterans Administration (VA) provide mortgage guarantee to veterans, military personnel and their families to help them buy a home by availing affordable mortgages. FHA and VA insured mortgages, guarantee the mortgage provider of receiving regular payments even if the borrower defaults. In other words, the government agrees to make good the deficit thus encouraging the lenders to provide affordable mortgages to veterans whose eligibility is determined on the basis of the number of days of active duty and other requirements. The guarantee or the insurance is an alternative to private mortgage insurance (PMI) which is unavoidable if the amount of down payment is less than 20 percent of the mortgage loan. The HUD Veteran Resource Center (HUDVET), which is a partnership between National Veteran Service Organizations and HUD, is meant to provide information regarding a wide variety of HUD homeless assistance programs and services for veterans.

Homeless People
People who reside primarily in shelters owned and operated by the government or by private entities, in areas that are not meant to be used for the purpose of accommodation; or in asylums that provide lodging to people who are meant to be institutionalized are referred to as homeless. Homeless people live in the aforementioned areas due to the inability to arrange for fixed and adequate accommodation. The HUD provides housing assistance grants in lieu of rental payment to homeless people with disabilities under the Shelter Plus Care Program. In addition to grants, it also provides rental assistance to homeless people for the moderate rehabilitation of single room occupancy dwellings. HUD’s Supportive Housing Program provides accommodation, within a supportive framework, to homeless people. The HUD also provides grants to improve the existing shelters and increase the number of shelters as a part of it’s Emergency Shelter Grant Program.

Seniors and People with Disabilities
Federal housing assistance is available to seniors who have limited income and positive equity on the house. The Home Equity Conversion Mortgages (HECMs) are reverse mortgages that are insured by the U.S. Federal Government and are provided by FHA approved lenders. However, seniors who may be incapable of residing in their house after a certain length of time need to be aware of the pitfalls of reverse mortgage. Public housing units also provide decent and safe rental housing for elderly people, low income families and people with disabilities who do not have a home. Housing Choice Vouchers is another facility that aims at helping the elderly pay for privately owned rental accommodation. People who have disabilities and are interested in buying a home can contact a HUD approved Housing Counselor who is certified and educated in guiding clients with special needs.

It is advisable to visit the HUD local office or the HUD website to obtain information regarding applying for government housing assistance. Veterans interested in applying for housing assistance may visit the HUD Veteran Resource Center for further details.

Government Help to Stop Foreclosure

The government has launched a number of plans in order to provide relief to homeowners who are unable to make the necessary mortgage payments. Government help to stop foreclosures assumes the form of low cost refinancing and payment modification to help distressed homeowners.

Government Help to Stop Foreclosures

Foreclosures have become rampant due to the inability of the borrowers to make mortgage payments. As a result of defaulting on mortgage payments, many borrowers have lost their home. The government, in an effort to stabilize the housing market, is providing assistance to the borrowers to help them pay off their mortgage dues. On February 10, 2009, the Obama Administration announced the Financial Stability Plan to tackle the financial crisis and help speed up the process of economic recovery. Since the crash in the housing market is said to have contributed to the current recession, it is hoped that efforts to stabilize the housing market will go a long way in ensuring financial stability and eventual economic recovery.

Government Programs to Stop Foreclosures

Making Home Affordable Program: The Making Home Affordable Program is a part of the Financial Stability Plan. Making Home Affordable Program is intended to help people make mortgage payments and thus prevent avoidable foreclosures. This program has helped about 9 million Americans reduce their monthly mortgage payments and bring them down to affordable levels. The program is meant for borrowers who are at an imminent risk of defaulting on loans, owned or guaranteed by Fannie Mae or Freddie Mac. The Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP) are a part of the Making Home Affordable Program.

Home Affordable Modification Program (HAMP): The aim of this program is to modify first mortgage payments so that the borrowers have an affordable payment structure, provided the mortgage was obtained before 1st January, 2009. The government is providing incentives to lenders to reduce interest rates so that the homeowner can make the required mortgage payments. In fact, the interest rate can be as low as 2 percent, if deemed necessary. The rate of interest, that may be below the market rate, is fixed for a period of 5 years from the date of the loan modification. After the 5th year, the interest may increase at the rate of one percent annually, till it reaches the market rate that existed at the time of the loan modification. The government has provided a number of incentives to private lenders to ensure that they voluntarily participate in HAMP. The monthly mortgage payments should be greater than 31 percent of the pre-tax income. The borrower can only finance a first mortgage on his primary residence. Moreover, the mortgage dues should be $729,750, $934,200, $1,129,250 and $1,403,400 for one, two, three and four unit houses respectively. People who have a second mortgage are eligible for primary mortgage payment modification. One would also have to make at least three mortgage payments during the trial period, failing which, one may not qualify for a loan modification under HAMP. The best part about this program is that the borrower does not have to pay for loan modification or late fees.

Home Affordable Refinance Program (HARP): This program is meant for eligible borrowers who are current on their mortgage payments but want to take advantage of lower interest rates by refinancing. Refinancing will not reduce the principal balance but will help people whose mortgage interest rate is much higher than the current market rate. Borrowers who are delinquent or have been overdue for more than 30 days in the last 12 months, will not qualify for refinancing under HARP. Moreover, the amount due should not exceed 125 percent of the current market value of the property. Refinancing from an adjustable rate loan (ARM) to a low fixed rate loan or eliminating interest only payments or balloon payments, help make the repayment structure more convenient for the borrower. This program will be operational till June 10, 2010.

HOPE for Homeowners Program: This program was launched on October 1, 2008 and will expire on September 30, 2011. While the Making Home Affordable Program is only meant for loans owned or guaranteed by Fannie Mae or Freddie Mac, HOPE for Homeowners Program covers FHA (Federal Housing Administration) Insured loans. The program aims to help borrowers refinance their home even if the built up home equity is less than 20 percent. This is done by promising FHA, a share of built up home equity in case the house is sold by the homeowner. On May 20, 2009, ‘Helping Families Save Their Homes’, bill was signed into law. This act aims to modify HOPE for Homeowners Program with the intention of providing additional compensation for primary and subordinate mortgage holders.

HOPE Now is a joint alliance between counselors, mortgage companies and investors, aims to aid homeowners in distress by helping them avoid foreclosures. Project Lifeline, launched in February 2008, was launched to help owners who were falling back on their mortgage payments. Six private lenders decided to delay foreclosures for 30 days and work out an affordable mortgage payment structure for those delinquent on their mortgage payments for more than three months. Project Lifeline was also a result of government persuasion. Government help to stop foreclosures will go a long way in stabilizing the housing market and giving a boost to the economic recovery.

Renters Rights During Foreclosure

Any unavoidable circumstances, because of which a person is unable to pay his regular installments, can cause him or her to face foreclosure. Under such circumstances, it is extremely necessary that they are aware of the renter’s rights during foreclosure. A general awareness of these tenant’s rights during foreclosure, puts the renter at a vantage point to fight his way through the tough times.

It has been estimated that a large percentage of foreclosures, that occurred in the United States, were on properties that were given out for rent. The landlord of the property might have initially thought that putting his property on rent would help him negate all his expenses and pay his monthly installments. But the fall in property value and unavoidable circumstances rendered him unable to make his monthly installment payment. Under such cases, the bank or the financial institution where he has mortgaged his property, can initiate the foreclosure process. The renter or the tenant, finds himself in the most awkward and trying situation as he is forced to face such a situation in spite of paying his regular rent. Understanding the foreclosure process and the timeline for foreclosure, are the other important aspects that the tenant needs to be aware of, along with the tenant’s rights, during foreclosure.

The foreclosure process does not have the same rules in every state. Before we start with the renter’s rights in foreclosure, let us have a brief understanding of how does a foreclosure process work.

The Foreclosure Process
If the property owner has mortgaged his property to a bank or any other financial institution and is unable to pay his installments, then the bank has the right to initiate the foreclosure process. During the foreclosure process, the lender approaches the court and the court issues a notice to the property owner. He is asked to pay a fine in addition to his installments, within a certain duration of time. If he fails to do so, the property is auctioned to meet the amount of loan given out by the loan lender.

Why is the Foreclosure Process Hard on Tenants?
When the foreclosure process is carried out, the renter or tenant staying in the property, often remain unaware of the situation. He keeps paying his rent regularly to the landlord and the landlord may not have the least wish to retain the property or resist the foreclosure. Besides, if the property is in the hands of the bank or some financial institution, they are least interested in the maintenance of the property.

Renters’ Rights During Foreclosure
The tenant’s rights during foreclosure have been strengthened by the ‘Protecting Tenants at Foreclosure Act of 2009′ signed by President Obama, on 20th May, 2009. According to this law, a tenant who has taken a property on lease, can retain the property for the entire duration for which he has signed the lease papers. He will have to pay his installments on a regular basis to the new landlord or property owner. This is the case if the new property owner has no intention to reside in the property. In case the new property owner or landlord wishes to stay there, the renter’s rights in foreclosure demands that he should provide a notice of 90 days to the tenant, to vacate the property. Similarly, if the renter staying in the property is paying the rent on a monthly basis and has not signed any lease papers, then he should also be given a 90 days notice period. This notice period i.e. 90 days, is far more than than in any other country.

These tenant’s rights during a foreclosure process ensure the tenant’s security. Besides this, the new property owner should not get the property vacated, unless he wants to reside in it. An empty property will just further depreciate the cost of the property in the market. However, it is always wise that the previous landlord should try out all possible ways to stop a foreclosure, like foreclosure bailout loans and mortgage loans. This is because no one comes out a winner after a foreclosure and the consequences of foreclosure are as bad, if not worse, as the process itself.

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So you’ve fallen behind a couple of months on your mortgage payment, what should you do? Contrary to popular belief, your bank does NOT want your home to enter foreclosure, and is willing to work with borrowers that are delinquent and/or have potential to default on their mortgage. For a lender, the cost of foreclosure can cost them as much as 20% of the remaining principal balance. Also, a delinquent loan showing as a nonperforming asset on the books leads to lenders viewing foreclosure as a very unattractive last resort.

However it, it important for the borrower falling behind on their mortgage to take a proactive approach to finding a resolution to this circumstance. It is extremely important for the borrower to contact their lender as soon as possible to discuss the situation. The earlier you discuss it with your lender, in most cases leads to a more attractive alternative to avoid foreclosure.

When you call your lender, some of the questions you can expect to be asked include: What caused the borrower to fall behind in their payments, whether the cause has been remedied, and how/if the situation can be fixed. For example, a borrower that is suffering an illness to themselves or a family member will require a different alternative as opposed to the borrower that suffered a temporary job loss.

As a borrower that is at risk of foreclosure, its important for you to make a call to your lender as fast as possible. Run don’t walk to the telephone. Its your responsibility to be truthful and realistic in your dealings with the lender. Unrealistic repayment promises can lead to a debilitating loss in faith that will further erode the relationship between you and your lender. Nay lenders have loss mitigators whos job it is to find a viable solution that will keep you in the house. Make sure to ask the name of the person you are dealing with from the lender, and also ask that any agreement that is reached on the telephone is confirmed in writing and sent to you via fax, email, or snail mail. If the conversation goes well and you are feeling brazen, you can request for all or part of the late fees to be waived. If you’ve ever dealt with the collection types before, then you know most of them have the personality to match the demands of the job, so refuse to lose your cool and remember that the person on the other end of the phone is only doing their job.

In this section Ill give a few approaches that can benefit the delinquent borrower. One possible solution to the steps outlined previously are for the loan to be recast, which is an adjustment in the loan terms that more accurately reflect the borrowers temporarily or permanent change in income and cash flow. An example would be for the lender to lower the mortgage payment for a predetermined amount of time. Some lenders may choose to lower the actual note rate (or interest rate of the loan). Another example of loan recast would be to take the unpaid balance and add it as a lump sum against the proceeds from the future sale of the property. Another option the lender may offer as an alternative to foreclosure would be to add multiple unpaid months worth of interest, payments, and delinquency fees onto the loan balances, then pay off the added debt through small additional monthly payments on top of the regular payments.

By: Kevin Fenderson

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Consequences of Foreclosure

The following article examines the consequences of foreclosure.
Foreclosures are the result of the home owners being unable to discharge their mortgage dues. This may happen because of a number of reasons. Getting laid off, illness or bad investments may result in people being unable to fulfill their mortgage obligations. For most people, foreclosures are the result of not anticipating the down turn in the housing market. The belief that home prices always appreciate, led people to borrow huge amounts of money to buy a home. Since most of the borrowers were sub prime, as soon as interest rates started appreciating, they found themselves unable to make principal and interest payments. This in turn forced the lender to initiate foreclosure proceedings in order to recover the mortgage dues.

Consequences of Foreclosure

Renting: Once the foreclosure sale is complete, the erstwhile home owners have no option but to look for alternate accommodation. Looking for rental accommodation may not be easy for people who have a foreclosure on their record. Prospective landlords may be unwilling to rent a house or a condo to tenants who in the past, have been unable to repay their debts.

Credit Impact: The credit score invariably takes a hit on account of foreclosure. The credit score can fall by as much as 300-400 points. A foreclosure makes the credit history averse and negatively impacts a person’s eligibility for various loans in the following manner:

Credit Cards: Credit card companies may increase the annual percentage rate (APR) on the existing credit cards after a foreclosure. People may find it difficult to sign up for low interest rate credit cards that may help them rebuild their credit scores.

Mortgage Loans: Seeking a home loan after a foreclosure is another issue. Both Freddie Mac and Fannie Mae have increased the waiting period for seeking conventional mortgage loans, after a foreclosure sale, to 5 years. FHA (Federal Housing Administration) and VA (Veterans Affairs) insured loans can be sought 3 years from the date of a foreclosure sale.

Car Loans: Getting a car loan is also difficult after a foreclosure. Dealers and banks are generally unwilling to lend to people who have found it difficult to keep up the mortgage payments on their house. Even if lenders are willing to provide a car loan, they may charge a very high rate of interest as compensation for the risk involved.

Manufactured Home Loans: Getting a bad credit manufactured home loan is again not an easy task. In case the borrower’s credit score is less than 600 points, lenders would require up to 35% down payment for equity loans availed to make necessary improvements on the house. Hard money lenders may be willing to provide a loan for buying a manufactured home at very high rates of interest.

Taxes: Mortgage lenders may be willing to forgive or cancel a portion of the debt that they may not recover after foreclosure sales. However, unless the loan is a non-recourse loan or the borrower has declared bankruptcy or is insolvent, the amount of debt cancellation is taxable. For recourse loans, taxes are calculated on the debt cancellation income, which is the difference between the fair market value of the property under foreclosure and the amount of mortgage debt owed, assuming the difference is positive. Gain from foreclosure sale is also taxable if the home has not been the primary residence of the borrower for at least 2 of the 5 years prior to the date of foreclosure. However, gains less than $250,000 (or $500,000 for married couples filing jointly) are exempt from taxes. For non-recourse loans, this gain is calculated as the difference between the mortgage debt prior to foreclosure and the purchase price of the home including the cost of improvements. For recourse loans, the difference between the fair market value of the property under foreclosure and the purchase price of the home including the cost of improvements is taxable. Keeping in mind the aforementioned consequences of foreclosure, the government has initiated debt relief and debt restructuring programs.

Government Help to Stop Foreclosures

A number of foreclosures, that have been taking place since September 2007, have resulted in the government adopting measures in order to help people avoid impending foreclosures. Making Home Affordable Program and HOPE for Homeowners Program and are some of the positive initiatives taken by the government to help people avoid foreclosures. Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP) are a part of the Making Home Affordable Program. In fact, private mortgage lenders have also been encouraged to allow short sales as an alternative to foreclosure sales. Despite these measures, many people have been facing the brunt of foreclosures.

Before we start with debt consolidation tips, we should first understand what debt consolidation is? When a situation arises when it is very difficult to manage debts either due to lack of time or money, debt consolidation is availed. It doesn’t matter whether it’s our personal debts, business debts, credit card debts or any other debts. A debt consolidation is basically availed to pay off the debts so that our debt doesn’t turn into bad debt. However, it has been rightly said if a things is not used in an appropriate manner, it doesn’t achieve its full utility. In the same manner, we are also required to follow some tips before undergoing debt consolidation.

The best part of availing debt consolidation is paying low interest rate. Otherwise the person has to pay high interest rate on other debts. Thus it will be right to say that debt consolidation helps in saving an amount of money.

The person is required to make sure the type of interest rate he choose, as broadly there are two type of interest rate that is fixed and flexible. Fixed interest rate doesn’t changes and remains the same. On the other hand flexible interest rate fluctuates. Usually, flexible rates are low in the beginning but after some time they might get increased so, a serious thought must also be given on this matter.

For applying debt consolidation, the person is needed to fill an application which ask personal, financial and debt details. In this the lender also negotiates with the creditors of the person in order to reduce or waive some amount of debt payment. It must be remembered that negotiation takes place in regard to the interest rate or other penalties, in the sense that negotiation doesn’t affect the principal amount.

After an effective negotiation, the lender pays off all the creditors accordingly and the person is left with the single monthly payment rather than making multiple payments.

When the person plans to avail debt consolidation, he must make sure that the lender is reputable in the financial market as this is the matter of debts and finances. Terms and conditions of debt consolidation must be read carefully in order to avoid any unfavorable term.

It is absolutely true that debt consolidation will help the person in leading a debt free life. But, after becoming debt free, he must make sure that his wasteful expenditure is curtailed and there must be reduction in the usage of credit cards in order to avoid the re-occurrence of debts.

By: Elaine Owen

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Financial Help to Stop Foreclosure – Stopping Foreclosure of a Property

Foreclosure is like the nightmares for many home owners and property holders. The recent recession that has started off in the second half of the 2000′s decade is one of the worst financial melt downs that hit the property and real estate sector. The following article is a suggestive essay on financial help to avoid foreclosure and also contains some effective tips that can be used in stopping foreclosure of property.

What is Foreclosure?

Foreclosure is often defined as a set of legal proceedings that are initiated by the creditors or lenders in order to repossess pledged assets of the borrower in order to recover the losses that arise from default payments. Well, if this definition is too specific, here’s the explanation. Many a times, it so happens that we borrow loans or avail credit, as we are short of cash. While using this credit, the borrower of the money has to pledge a collateral or security with the lender. It means that if the borrower is unable to pay back the lender within a specific period of time, that lender has authority to confiscate and sell off the pledge asset to recover losses. This process of confiscating the asset is termed as a foreclosure.

• Unexpected loss in business
• Sudden illness or an accident
• Loss of second income
• Brutal Lay offs by the employer
• Sudden insolvency of the company that one is working in
• Negative and sad events in the family such death or divorce

Stopping Foreclosure of a Property

There are some easy and yet possible methods to stop foreclosure. One needs to understand, accept and assess the situation before constructing a policy and implementing the strategy. Here are some tips that will help you to overcome the situation.

• Keeping a Tab on Installments: One of the methods by which the foreclosure can be avoided, is to keep a tab on installments, right from the beginning. This strategy has to be followed right from the moment that you avail the loan. Setting aside money from one’s periodic income, before spending any money always helps a lot.
• Mortgage Lender: It often helps in stopping foreclosure of property, if one talks to the lender of the loan. Many a times, the lenders themselves increase the time period of the loan and also charge a certain fine that is quite reasonable. This strategy will help you buy time.
• Consolidation Loan: A debt consolidation loan is a very good option to get financial help to avoid foreclosure. The only condition required in order to get this loan is that you should have a good credit history. Sometimes you can also club some other loans like an auto loan or a students loan with the consolidation loan.
• Curb Expenditure: One of the most patience testing method of stopping a foreclosure is to curb the unnecessary expenses. You will be surprised by the amount that you are able to save, using this strategy.
• Acting Early: The best policy is to act early and take the right decision at the right time. There are a lot of different options to bring in financial help to stop foreclosure. Some of the mortgage lenders also suggest declaring bankruptcy, I sincerely hope and pray that none of you get caught in such a complex situation.
• Sale of Property: This is a rather weird option that can be used in stopping foreclosure of the property. The market prices of all real estate are always rising and falling. If the market price of your property is greater than the total amount of the loan, then it is advisable to sell the property with the consent of your lender. In this manner, you are left with a reasonable amount of money and the loan is also repaid.

To prevent a situation that is similar to foreclosure, it is always wise to make timely payments while repaying a loan and also have a good credit history in order to avail other loans or a refinance or consolidation loan.

By Scholasticus K
Published: 7/29/2009

A California foreclosure specialist offers advice to homeowners on how to work with mortgage companies in order to save their homes.

Obviously the best way to avoid foreclosure for most California homeowners is to never fall behind on your mortgage. Unfortunately, there are many reasons for borrowers to become delinquent on their payments.

According to Michael Carley, who is a California specialist in foreclosure mitigation and mortgage mediation with California Mortgage Saver, last year there were a record number of California homeowners who received Notices of Default or lost their homes to foreclosure … and many more expected this year.

The faltering real estate market and sub-prime mortgages are the two biggest factors for this disturbing development. Carley explains that an increasing number of homeowners now owe more on their property than its market value. This is a prelude to default if the owner experiences a financial setback or the need to move.

Another sobering fact is that default notices are becoming much more likely to turn into foreclosures. And although homeowners can resolve their defaults by catching up on payments, refinancing or selling the balance owed, one expert said that only 41 percent of homeowners in default are in a position to pursue these options this year compared to 71 percent last year.

According to Carley, once the foreclosure ball starts rolling most California homeowners simply don’t have the self-help know-how to stop foreclosure proceedings from escalating. Being armed with the proper knowledge, however, is exactly how you can prevent it.

So here are Carley’s 4 prevention tips for a homeowner to quickly stop or avoid foreclosure in an affordable manner:

1) Foreclosure mediation is usually the best strategy.

Despite their loud bark, lenders generally don’t want to foreclose on your home. They are already “up to their eyeballs” in dealing with their ever-growing portfolio of foreclosed properties in California. Lenders often don’t help make the mediation process easy, because of communication difficulties and their initial insistence on you accepting either a repayment-in-full plan or a re-payment plan (favorable to them) that you can’t afford.

A favorable resolution requires you to:

• Understand the situation both from your perspective and the lender’s.
• Know all your options, including whether you really want to keep your home.
• Realistically assess how affordable your home is under your current situation.
• Document your current financial status and adequately explain to the lender why you became delinquent.
• Propose a payment plan that is satisfactory to your lender, while giving you the flexibility to meet all of your financial obligations.

2) Make sure that you completely understand and choose the right option.

There are many options for you to consider when resolving your mortgage issues. Each one has its own advantages and disadvantages. Depending on each person’s unique set of circumstances, some options that are right for you are completely wrong for someone else…and vice-versa.

Among the more common mortgage resolution options are:

• REINSTATEMENT OPTION
• REPAYMENT OPTION
• LOAN MODIFICATION
• LOAN REFINANCE
• LOAN FORBEARANCE
• PARTIAL CLAIM (only for FHA loans)
• SHORT SALE / PRE-FORECLOSURE SALE
• DEED-IN-LIEU OF FORECLOSURE

3) Consider a qualified third party to handle your mediation.

Representing yourself in a foreclosure mediation is somewhat analogous to a person who chooses to become their own lawyer in a legal proceeding. If you don’t know exactly what you are doing, you might find out that you have a “fool for a client”.

A qualified mortgage mediation professional already has the needed experience and established working relationships with mortgage lenders. They can help you avoid the common mistakes that many borrowers face while trying to iron out their mortgage issues with the lender.

It is always best for look for a licensed real estate professional, because their knowledge of the lending industry often enables them to resolve your mortgage situation in the most favorable possible terms for you.

It helps to look for a specialist who works primarily within your state. Since laws, rules and regulations vary greatly across each state, you will be in much better hands if you choose a top professional expert who focuses their work in your stateas opposed to those who scatter their work load across the country.

4) Beware of amateurs and con men who are trying to take advantage of you.

Any time a group of people find themselves in a vulnerable position, there are vultures swarming to take their bite. Unfortunately, the current foreclosure crisis is no exception. If you come across a mortgage mitigation company that is either charging an exorbitant fee or requiring you to pay a non-refundable deposit, then look elsewhere.

Always look for references, professionalism, reasonably low fees and other signs of credibility. An honest foreclosure mitigation company will affordably offer you alternatives that can help save your home, as well as significantly reduce your debt. They might also minimize your credit damage.

In fact, a top loss mitigation company will not only perform their service for a fair, low fee, but will also understand that time is of the essence. During a foreclosure prevention, homeowners require fast action and guidance because the clock is always working against them.

Michael Carley is the president of California Mortgage Saver, which is a mortgage mitigation consulting firm that specializes in helping California homeowners. Carley has an extensive real estate and mortgage lending background. California Mortgage Saver will work with California homeowners regardless of their credit and does not charge for an initial consultation.

To Contact Michael Carley:
Call 1-323-663-0436

By Al David
Published: 4/19/2008

Mortgages for People in Foreclosure

Mortgages for people in foreclosure may help prevent foreclosures and save people the pain of being evicted from their home on account of the inability to discharge mortgage obligations.

The Federal government has launched a number of programs to stop foreclosures that have become rampant after the collapse of the housing market. Some of these programs are meant to help homeowners modify mortgage payments while others help home owners refinance their home. In addition to modifying mortgage payments and aiding mortgage refinancing, the Obama administration is also trying to provide relief to homeowners, who are unable to make the necessary mortgage payments, by encouraging mortgage lenders to allow short sales. To know more about the eligibility criteria, to qualify for mortgage modification or refinancing, one may refer to the article titled, “Government Help to Stop Foreclosures“.

Mortgages for People in Foreclosure

Mortgage refinancing refers to the process of replacing a mortgage loan with another mortgage of the same size having relatively favorable repayment terms. Of course, mortgage refinancing is possible only if one has positive built up equity in the house. The following programs can help homeowners refinance their mortgage and thus prevent foreclosures.

Home Affordable Refinance Program
People, whose loans are owned or guaranteed by Freddie Mac or Fannie Mae, have the option of refinancing their mortgage from an adjustable-rate mortgage (ARM) to a low fixed rate loan. In fact, they may be able to replace their current mortgage with a mortgage that demands interest only payments or balloon payments. The new mortgage loan, that is provided under HARP (Home Affordable Refinance Program), cannot exceed 125 percent of the current market value of the property. The Home Affordable Refinance Program is a part of the Making Home Affordable Program and will be operational till June 10th, 2010.

HOPE for Homeowners Program
The HOPE for Homeowners Program was launched on October 1st, 2008. This program is meant for homeowners whose loans are insured by the FHA (Federal Housing Administration). This program can help homeowners refinance their mortgage even if the built up home equity is less than 20 percent. The program, which expires on September 30th, 2011, was modified on May 20th, 2009, with the intention of providing additional compensation for primary and subordinate mortgage holders.

Bad Credit Mortgage Refinance
People, whose loans are not owned or guaranteed by Freddie Mac or Fannie Mae or individuals who do not have FHA insured loans, may consider approaching a mortgage broker, who may be willing to provide a new mortgage loan to replace the current mortgage, provided they have sufficient built up equity in the house. However, the borrower may be forced to pay a high rate of interest on the loan and this may very well defeat the purpose of mortgage refinancing. Moreover, mortgage brokers may also expect the borrower to purchase points wherein the cost to purchase one point is equal to 1% of the total principal amount of the mortgage loan. Although purchasing points will lower interest rates, the Internal Revenue Service (IRS) considers points as prepaid interest which has to be deducted over the term of the loan rather than at the time of closing. Again, the borrower would be required to pay closing costs that are rather steep to refinance the mortgage. A cash strapped borrower, who is not eligible for refinance under HARP or HOPE, may be unable to afford mortgage refinancing due to the aforementioned reasons.

It’s evident that mortgage refinancing may help prevent foreclosures. Just as mortgages for people in foreclosure are hard to come by, seeking a mortgage after foreclosure is also a tough task. The best way to obtain a mortgage after foreclosure is to improve credit scores that may fall by up to 350 points as a consequence of foreclosure.