Elizabeth Warren, a Massachusetts Democrat and longtime consumer advocate who is quickly developing a reputation as perhaps the Senate’s most effective cross-examiner. Following a series of probing questions that would not have been out of place in a court room, Warren excoriated the regulators for not immediately turning over case records of borrowers who may be considering private legal action against their bank.
“You have made a decision to protect the banks but not to help the families who were illegally foreclosed on,” Warren said. “Families get pennies on the dollar for being the victims of illegal activities.” Read more
Many, if not all, of us have been touched by the current state of the economy. This is a very scary time with people losing significant portions of their retirement, getting demotions at work, companies going out of business and people getting laid off. Foreclosure can happen to anyone. Today I wanted to share ten tips for avoiding foreclosure from www.hud.gov.
If you are having trouble keeping up with your mortgage payments or are not able to make them at all:
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 www.hud.gov.
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 assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287.
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 card 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 recover 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.
With interest rates so low, people are looking for different ways to invest their money. Housing prices are at an all time low, consider investing in rental homes. Let the low interest rates work to your advantage as you purchase homes to rent with only 20% down.
Location, location, location is key to finding good investment property. Become knowledge about the community. Do research, if necessary. People want to rent in areas that are convenient to schools, shopping and an easy commute to work. You will find cheaper houses in outlying areas but with gas prices so expensive, these are becoming unattractive to tenants. A recommended real estate professional can give great advice on where to invest.
You may want to look at foreclosures when looking for a good buy. You are not the only one looking for a bargain, many investors know to look at these properties. If a property has been on the foreclosure list for very long time, be cautious, there may be some sort of problem with it.
The disadvantage of all the foreclosures is that now banks are not willing to approve mortgages with low down payments for new investors. Typically, you need 20-30 per cent down payment for rental real estate. You want to be sure that your monthly payments leave room for profit for the amount of rent you’ll be able to ask for the area.
Make sure you calculate all of your expenses when determining if a particular property will be profitable. Besides your mortgage, if you decide to use a property management company expect fees of $75 to $100 per month. You also need to plan on other maintenance costs for up keep. There needs to be enough profit margin that you can handle these expenses as well.
Rental Properties Offer Owners Tax Advantages
Basic tax advantages landlords receive from their investment in real estate properties are like to those of homeowners. You are able to deduct property tax expenses and mortgage interest costs from your federal tax return.
In addition to these deductions, the landlord has other tax incentives. If you, the landlord, provide utility services such as water, heat and/or electricity at no cost to tenants, tax laws allow you to deduct these costs from the income on the property. Furthermore, all operating expenses for your rental property are tax deductible. This includes maintenance and repair costs, like repainting or replacing windows, gutters and floors. Fees for liability, property and rent loss insurance are also tax deductible.
Thanks to depreciation deductions, landlords are offered tax advantages by the IRSfor improving their rental properties. Improvements include installation of a security system, a swimming pool, new furnace or air conditioner, any new appliances or upgrades to the kitchen. Or maybe you want to add on another room or a porch to the rental home. These also would be considered an improvement, not an operating expense. These expenses may not be written off as operating expenses, they are written off as depreciation of improvement deductions.
Depreciation Tax Advantages without Improvements
Depreciation costs are those accumulated by the normal use of any residential property including rented buildings. The IRS acknowledges the fact that a building wears out over time and permits landlords to deduct some of the cost of depreciation every year for up to 27.5 years. These deductions do not require you to spend anything in order to use the deduction on your tax return. Just calculate the value of the building and the allowable depreciation on that amount. The only time you will spend money for a depreciation deduction is when you make improvements to the property. Realize that you will have to make some of these improvements to keep the home livable.
Other Tax Deductible Expenses
If you don’t already have an accountant, you may want to use one now. An accountant specializing in rental properties will make sure that you get all the deductions offered to landlords; their fees are a deductible expense. Other possible expenses are the wages of employees hired keep books, deal with tenants or make repairs. If you engage a property management company to take care of those things; their charges would be a tax deductible expense. Items like office supplies, phone bills, and even stamps can be deducted as costs of doing business.
Buying investment property now when prices are low is a wise move. Later as the housing market recovers, you can sell at a profit, if you wish. Enjoy all the tax advantages of being a landlord and the extra income from a rental property. You may find a better return on your investment than other options open to you.
Are you currently mired in a mortgage of doom? If you are afraid that you’ve bitten off more home loan than you can chew, you are not alone.
Statistics show that nine out of every thousand homes in the United States had pre-foreclosure status in the first seven months of 2007. California is the national leader in the annual amount of pre-foreclosures, with 132,101 actual filings in the first seven months of the year. Alpine County in California saw an amazing 39.3 instances of pre-foreclosure status per thousand homes in July 2007.
What options are available to a homeowner in trouble? You don’t have to sit back and wait for the bank to take your home away. Short sales offer pre-foreclosure properties an exit strategy.
Short sales offer an option to the smart homeowner that is trapped in a mortgage they simply cannot afford to pay. Whether your interest rate ballooned out of control, your job situation changed or you simply have more money going out coming in with your current income, there are options left even if your home is in pre-foreclosure.
How do short sales work? Once you find yourself in pre-foreclosure, find a realtor that specializes in such situations. Because the market is flooded with vulnerable homeowners, it is important to choose a reputable real estate agent.
They will assist you in approaching your bank or lender with the proper information to request a short sale. If this is granted by your lender, a large portion of your debt may be forgiven. In essence, short sales save the bank a long and drawn out foreclosure process and the expenses that go with it. They are likely stuck with several foreclosures and simply want to recover the majority of their funds. In other words, the amount of money you owe on your home becomes negotiable.
A good realtor will save your credit rating and help your family find an affordable home. It is wise to hire their services, as short sales can be tricky. For instance, you will need to consider interest in the total amount you currently owe on your home, which is not included on the amount listed on your monthly statement.
Your realtor will help you assemble documentation on your financial status. This is proof for your lender of your inability to pay on the mortgage. You will need financial statements as well as a hardship letter, which is a personal statement on your situation. Your realtor will then approach the bank on your behalf and attempt to free you from your unmanageable mortgage.
Pre-foreclosure is a stressful time. Just know that many other people across the country are in the same situation. The most important thing to remember is to be proactive, or else suffer the mark of a foreclosure on your financial records for many years to come. With guidance from a trusted real estate agent, you will find a way out of this difficult situation that will not leave you in ruin. Short sales help save your financial status.
In North Carolina, though the mortgage crisis is forcing more and more homes to go into foreclosure, the entire situation on the North Carolina bank foreclosures is not as bad as it is with many major cities in the United States. There were only 4,303 North Carolina foreclosures filed by the end of July 2008, and mostly centering in cities like Charlotte and Raleigh. This translates to one household in 936 that faces foreclosure proceedings. That is not so bad when compared to the ratio of foreclosures in Nevada, the state hardest hit by the mortgage crisis, which is pegged at 1 for every 106 households.
Nonetheless, North Carolina bank foreclosures, including Raleigh bank foreclosures, are still being targeted by real estate investors. The real estate market in North Carolina is still healthy enough, with market values not that depressed, to turn in a good profit. It is highly possible to score a good deal in buying Raleigh bank foreclosures – buy at discount, make some improvements on the property and then sell at market value. The challenge is that real estate investors need to be vigilant in searching for these Raleigh bank foreclosures.
To be able to break into the market of North Carolina bank foreclosures, an investor must constantly be on the lookout for properties nearing default. Depending on the foreclosure type that the investor prefers to work with, being able to spot a good property going through the Raleigh bank foreclosures process early on would give the investor an edge over his competitors as well as enough time to do the research required for the property. Research naturally includes title searches to check if the property is clean or has outstanding liens against it. Because outstanding liens on the land can take away a good chunk of an investor’s expected profits, investors are always advised to stay away from Raleigh bank foreclosures that have considerable senior liens.
Another advantage given by being able to find a good property going through the foreclosure process is that the investor would have enough time to do the math and to secure the financing for buying the property. Doing the math ahead of time will allow the investor to compute how much he would need to make as a maximum offer for the property. It will also let him assess costs for doing improvements and repair work, which is often necessary when it comes to investing on foreclosures. The time allowance will also give him enough room to secure the financing required for buying the foreclosed home.
As much as a lot of preparation is required when investing on North Carolina bank foreclosures, what is perhaps most important is for the investor to know the local state laws governing North Carolina bank foreclosures. Knowing these will help guide him as to the proper progression of the foreclosure process in North Carolina, thus not wasting valuable time and money. There are many consultants that investors can work with in these area, such as real estate attorneys.
With the increasing rate of foreclosures nationwide including Los Angeles – the largest city of California is attracting homebuyers and real estate investors to pour their money to buy them. Los Angeles foreclosures occur in the situation where lender repossesses the mortgage property and then sells it to recover the default loan.
But before sailing the boat into Los Angeles foreclosures one should educate oneself about the process involved and get ready with vital research with strong track. This can be done without visiting to a real estate broker that could be burdensome. Now days, web based real estate listing services are available which help you in your goal to get a right property. These services are flooded with necessary pre-foreclosure and foreclosures information.
All states have their different laws. Before venturing in Los Angeles foreclosures buyer should get familiar with the foreclosure law prevalent in the local state of his desired property. For example, some states like Florida and New York follow the judicial process which require the lender to file a lawsuit against borrower and when the court orders, only then the property is repossessed by the former party. Whereas, states like Texas and California follows the non-judicial process.
So, for prospective home buyers and investors, there are three different opportunities where he can bargain for Los Angeles foreclosures –
Pre-foreclosures: here the buyer can directly contact with the seller, inspect the property and close the deal. Public Auction: in this situation, the minimum bid is offered and whosoever bid the highest, will be the winner. But one should get ready with the finance as it required the cash payment. Moreover, there are cases where one do not get chance to inspect the property and know the actual status. Bank-Owned Properties: when the property is not sell out during the auction, the listing is sent back to the bank where the lender pay all taxes and get some necessary reconstructions done to take the property into real estate market.
Through online listings of Los Angeles Foreclosures one can get a series of property with a single search criteria like zip code, location, number of rooms, price etc. We have options of Los Angeles commercial foreclosures, repo homes and federal properties.
One should also check the status of taxes. It should be confirmed before finalizing the deal that no back taxes (that are to be paid to government on priority) are attached to the land which could move up the purchase price.
The common reasons foreclosures occur are because of loss of employment, death, separation or divorce and the economy. When one or two or more of this do occur, it is more likely that the property will end up in foreclosure. Whether it is foreclosures bank owned or other type of financial institution lender, it will be foreclosed if you missed up on payments. Reasons foreclosures occur may also come from other factors.
Foreclosures are lenders action to recuperate their investments and or interest on a defaulted mortgage. On the brighter side, foreclosures bank owned can be turned into investments.
A lot of us think that the reasons foreclosures occur is because of personal mismanagement. For the most part it is true. But there are other reasons and factors that may lead you to foreclose on your home mortgage. Knowing the other reasons why foreclosures occur can arm you with the most needed information in order to avoid it. Avoiding it can lead to better financial management and better financial outlook.
One big reason is a deteriorating and poor national and local economy. With poor national and local economy, jobs will be lost or outsource to other countries with cheaper labor market. Homeowners then will not be able to pay their mortgages and loans. And if you have a variable rate mortgage, your lending institution may raise the interest rate on your mortgage. And before you knew it you are no longer able pay your monthly bills and mortgage payments.
So as the saying goes, read what is painted on the walls. What I mean is try to read, listen to the news and what is going on in your local communities and the country as a whole. This way you will know when something is not going the way it should. It will give you the advantage of preparing yourself on what you can do before it hits you and your community.
Preparedness is key to avoiding any financial trouble and disasters.
Personal problems like separation and divorce or death of a spouse who is the sole provider for the family can be a factor. In the US health insurance and medical bills can be overwhelming and thus diminish you ability to pay your mortgage and other bills. In Canada, medical bills are not that big of a deal because of the health care system which is better than the United States. Personal problems can also lead you into financial problems. Protecting yourself from any of these eventualities can give you the upper hand when things get out of hand.
Getting prepared and informed about the reasons foreclosures occur can give you the advantage you may otherwise unable to have. On the investment side of things foreclosures bank owned can lead you to a better deal on a home property.
With historically high rates of default on home mortgages lenders are facing many more foreclosures than they have in the past. This allows for short sale investors and pre-foreclosure specialists to thrive in the current market. However, not everyone who defaults on a mortgage should be considered a candidate for a short sale.
A short sale is only one of six loss mitigation options, and playing the pre-foreclosure game successfully requires a working understanding of the other five. In this article we will look more closely at all of the options available to a homeowner with a defaulted mortgage so that you will be able to present a balanced picture to your client and help them make the decisions that are in their best interest.
Does working with sellers in pre-foreclosure mean you have to be a loss mitigation expert? No, but it does mean you should be familiar with the options available to your client and be able to refer them to a different specialist whenever appropriate.
The purpose of loss mitigation options is to provide an alternative to foreclosure for homeowners who have had difficulty keeping up with their payments but who may still be willing and able to stay in their homes. Generally speaking, a lender is not likely to offer loss mitigation options to the owner of an investment property. And a short sale is usually the last choice on the lender’s list of options, only slightly better than an actual foreclosure.
The first loss mitigation option, in order of the lender’s preference, is a repayment plan. This is where the homeowner catches up the payments and brings the loan current, perhaps by making higher than normal payments for a set period of time. The lender experiences no loss this way. The second option is a loan modification, where the borrower and the lender agree to new loan terms that are acceptable to both, perhaps with a lower interest rate but larger balance.
Third is a forbearance, which is where the lender allows the borrower to go for a specific amount of time without making payments, perhaps adding the back payment amount onto the balance of the loan. Those three options all apply to a homeowner who is able (eventually) to pay for the house.
For the homeowner who doesn’t have the means to stay in the house, the lender’s preferred option is an assumption, which is where somebody else who qualifies assumes the loan and resumes payments. Next is a deed in lieu of foreclosure, which is where a lender agrees not to foreclose but rather accepts the property by quit claim deed, which will protect the borrower’s credit somewhat. And finally, the last option considered by lenders before foreclosing is a short sale.
Understand that making use of any of these alternatives requires strict qualifying by the lender. All loss mitigation alternatives require there to be a legitimate hardship on the part of the borrower. A repayment plan, loan modification, or forbearance will require demonstration of the borrower’s ability to pay, an assumption will require the assumer to qualify for the loan, and a deed in lieu or a short sale will require documentation of the borrower’s inability to pay.
As a pre-foreclosure investor, only after you have informed your client of and eliminated all other options can you confidently proceed with negotiating a short sale.
San Diego foreclosures are at an all time high, following suit with the current trends for the country as a whole overall. For homeowners who are suffering from financial hardships, the word foreclosure can tie knots in their throats and create ulcers in their stomachs. Fear of financial ruin is what foreclosure can mean for them. On the other hand, for people who see San Diego foreclosures as a good economic opportunity, foreclosure is a word that can raise their eyebrows and turn up their grins.
Either way, no matter which perspective is applicable in a situation, San Diego foreclosures can be confusing, stressful, and are possibly the most misunderstood aspects of real estate markets in San Diego or anywhere else.
Foreclosures processes start when the bank or lender files a Notice of Default, or NOD, with the county.
The borrower is a number of days, weeks, or months behind on payments, and the amount of time that can pass without payment varies according to lenders and should always be included in contracts that are presented to the borrower at or before the time of initial sale. The foreclosure process ends in one of four ways:
1. The borrower, within the grace period determined by state law, pays the amount of money he is behind, the default amount, which will reinstate the loan. This grace period before San Diego foreclosures is called pre foreclosure.
2. During the pre foreclosure time period, the borrowers property can be sold, allowing the borrower to pay off the loan. If the amount of money that a borrower receives from selling his property is an amount that is less than what he owes, sometimes the lender will agree to a payoff amount that is less. This is called a short pay, or a short sale.
3. When the pre foreclosure period ends, a trustee can sell the San Diego foreclosure at a public auction to a third party to recover funds for the lending institution to recover some of its losses.
4. San Diego foreclosures can end when the lending institution takes or regains ownership of the property through an agreement that has been made with the borrower during the pre foreclosure period. The lending institution can also buy the property at a trustee sale. When a lending institution or bank have become the owners of a property, the bank owned property is then referred to as real estate owned or REO.
San Diego foreclosures appear as positive opportunities for buyers in the market because oftentimes a REO property is offered on the market at substantial savings with other incentives that may be included. REOs are less expensive than non REOs, and that buyer can turn around and sell the San Diego foreclosure for a profit for himself.
Whether you are a buyer or a seller, make sure you understand all stipulations about policies on San Diego foreclosures before you seriously enter any business proceedings to prevent more stress than you ought to have should you ever be involved in one.