Charlotte Foreclosure Help - Homeowners facing foreclosure in the
Greater Charlotte, NC and Lake Norman areas need to arm themselves with
the proper information when facing foreclosure. The foreclosure process
is perplexing, even for those experienced in real estate. Real estate
agents, attorneys, mortgage brokers, title companies, real estate
investors and other real estate professionals all have differing views
on the foreclosure process and what is the best route to take when a
homeowner faces this difficult situation.
Below are the Top 5 Financial Hazards That Homeowners Facing Foreclosure Must Avoid:
1.) Loan Modification/Repayment Plan - This is a possible solution to
foreclosure if the homeowner contacts the bank early in the process.
Some lenders are willing to change the terms, such as interest rate or
payment amount or extension agreement (extending the amortization period
for the remaining principal). The homeowner must be employed and needs
to have steady income to qualify. If a homeowner is not currently
employed, has filed for bankruptcy protection or does not make enough
income they will not qualify for a repayment plan. In most cases the
repayment plan/ loan modification is structured in such a way that the
new payment for the homeowner could even be HIGHER than the previous
payment. Or, the new payment is very close to the old payment and a
couple past due payment have been added to the back end of the loan. It
is for these reasons that most loan modification plans are not approved
by the lender servicing the loan.
2.) Deed-in-Lieu – This is a voluntary foreclosure. The deed–in–lieu
takes place when a homeowner in default voluntarily signs a deed giving
the ownership of their property back to the lender who issued them the
mortgage. Homeowners may mistakenly decide that this is the best option
so that they can move on with their lives; however, this is may only be
an illusion. Many lenders are aggressively pursuing homeowners in
default to pursue the deed-in-lieu of foreclosure option. The reason the
lenders pursue this option is because it saves them a tremendous amount
of money. A deed-in-lieu saves expenses associated with the foreclosure
because the bank does not have to pay an attorney for the fees
associated with the foreclosure process.
3.) Bankruptcy – Homeowner’s facing foreclosure often file Chapter 7 as a
solution to the foreclosure. Many attorney’s will advise their clients
that if they file for Chapter 7 that they will not need to worry about
the house. While debts are erased, the bank still needs to be made whole
and will need to sell the house. The lender will foreclose on the
property to force the sale and repossess it. This results in double
jeopardy for the homeowners, as they find that they not only have a
bankruptcy on their credit history, but also a foreclosure. The damage
done to their credit will eliminate their ability to get a new loan of
any kind for five years for the foreclosure, with more years added for
the bankruptcy.
4.) Refinance – When properties were appreciating, this option made
sense. Today, most homeowners owe more than their property is worth. To
complete a refinance, the bank will order a new appraisal and will lend
out 80 to 90 percent of that number. If the house is over-leveraged, the
homeowner and the property will not qualify for a refinance option.
5.) Mentally Checking Out - Often homeowners are so overwhelmed by the
process of foreclosure and what it could mean for their immediate future
as well as the years down the road, they do nothing: they mentally
check out. This mistake will result in at least one of the following
penalties, on top of losing the house, and one’s ability to be approved
for a loan for at least five years. They are: 1) the 1099; and 2) the
deficiency judgment.
Note: The above opinions are those of Michael Moulton and not to be
construed as legal advice. They are based on his experiences in working
with foreclosure situations with past customers. For more information
on your particular situation on your greater Charlotte, NC area home,
please contact his office at 704-885-0488.
Avoid Foreclosure Charlotte NC