In talking with our clients one question comes up time and again - "What are our options?" Closely related to this is the natural next question - "So, whats the best option?" In answering these questions it would be nice if I could come back to one surefire, tried and true answer that worked for everyone in every situation. However, life doesn't usually work like that, and this is a pretty big decision for most folks.
In determining what is the best option, the first question that needs to be answered is - what is the desired outcome? If your desired outcome is to move as far as you can from the money-sucking pit of sticks that you are currently living in (or own) then a sale or short sale would make sense. However, if you really want to stay in the house then a loan modification might be the better bet. Of course, a desire for a loan modification hardly means you will actually get a loan modification, but hey, stranger things have happened.
Another thing to consider is how much money you owe on your property versus how much that property is worth. If the loan amount is close to, or even below the value of the house (meaning you have equity in the house) then you are going to have an easier time obtaining a loan modification (usually). the more equity you have in a property the easier the process will be to sell as you have the option of not needing to go through the bank short sale process. Conversely, if you are upside down on your property it becomes more difficult to obtain a loan modification. In this situation, even if you are able to obtain a loan modification, most loan modifications don't address reduction of principal. It becomes difficult for many people to pay on a mortgage for $400,000 when the house next door is selling for $195,000. I'm not saying its right for the owners to walk away in that situation, but for rational people there certainly comes a point where a ding on their credit is worth saving tens or even hundreds of thousands of dollars.
Other issues that should be fleshed out are:
1. Do you need to move?
2. Where are you going to go if you move? If optional, how attractive is that location versus your current location?
3. What are the costs to move?
4. How expensive will it be to rent? Normally, renting will be cheaper than owning (especially if you are selling an upside down house), however, that is not always the case.
5. How much time do you have to make a decision? Is there a scheduled foreclosure date?
All of the issues mentioned above should be considered before committing to a certain course of action. However, in most cases the homeowner is leaning pretty strongly one way or the other. If this applies to you, that is likely because you have already thought about your options and discussed them with friends and family. Many of the points to consider are likely things that you have also considered. The final piece of advice I would give then is just to make sure that you plan out what happens next after the short sale or loan modification. Make sure you've got a plan that makes sense, and that is best for you and your family.
As always, if you would like to discuss your particular situation you can call our office at 480 532-7999 for a free consultation.
Sunday, June 19, 2011
Saturday, June 11, 2011
Alternatives to Foreclosure Besides Short Sale
I've posted before about short sales and why they are a superior alternative to foreclosure. As mentioned in an earlier post short sales are better than foreclosures, because, well they are - read the other post! Anyways, short sales do have some drawbacks and there are some folks who would rather just not have to deal with any of it - any solutions?
As it turns out there are solutions available. In many cases our firm can skip the short sale and directly take over payments, in exchange for the property. What would the benefits be to the homeowner is this type of situation?
Benefits:
- No foreclosure on record
- No hit to your credit from a short sale
- Payments are brought current, actually improving your credit score
- Minimal paperwork, minimal hassle - you hand over your keys and wave goodbye to your headache
Essentially, the process is just like a deed in lieu of foreclosure, except instead of giving the deed back to the bank you assign it to our firm. We then bring your mortgage payments current and after a period of time will refinance into a new loan or sell to a new buyer.
Obviously, this is a pretty great deal for anyone who has little or no equity in their property, or who has major work needed to bring their property to market. However, I'm sure many of you might be wondering - what's the catch?
The catch is that since the loan is still in your name, any payments made on the loan are good for your credit. However, if payments aren't made then that also affects your credit - negatively! I would like to assure anyone working with us that we will make their payments, however, just to completely reassure you, we write into our contracts that if we miss payments that the deed reverts back to you. Meaning, either we make payments and your credit improves (as opposed to decreasing for any other option) or we bring your payments current, giving you more time to work out an agreement with the bank. Obviously, we're going to make the payments, but its nice to know that even if everyone in our company were to be simultaneously run over by a herd of water buffalo, that you would be protected.
To see if you qualify for this program or if you are just curious about your options give us a call at 480 532-7999 or visit our site at www.mcahomes.com. As always, any consultation is free.
As it turns out there are solutions available. In many cases our firm can skip the short sale and directly take over payments, in exchange for the property. What would the benefits be to the homeowner is this type of situation?
Benefits:
- No foreclosure on record
- No hit to your credit from a short sale
- Payments are brought current, actually improving your credit score
- Minimal paperwork, minimal hassle - you hand over your keys and wave goodbye to your headache
Essentially, the process is just like a deed in lieu of foreclosure, except instead of giving the deed back to the bank you assign it to our firm. We then bring your mortgage payments current and after a period of time will refinance into a new loan or sell to a new buyer.
Obviously, this is a pretty great deal for anyone who has little or no equity in their property, or who has major work needed to bring their property to market. However, I'm sure many of you might be wondering - what's the catch?
The catch is that since the loan is still in your name, any payments made on the loan are good for your credit. However, if payments aren't made then that also affects your credit - negatively! I would like to assure anyone working with us that we will make their payments, however, just to completely reassure you, we write into our contracts that if we miss payments that the deed reverts back to you. Meaning, either we make payments and your credit improves (as opposed to decreasing for any other option) or we bring your payments current, giving you more time to work out an agreement with the bank. Obviously, we're going to make the payments, but its nice to know that even if everyone in our company were to be simultaneously run over by a herd of water buffalo, that you would be protected.
To see if you qualify for this program or if you are just curious about your options give us a call at 480 532-7999 or visit our site at www.mcahomes.com. As always, any consultation is free.
Sunday, March 20, 2011
Credit Card Debt and Settlement
It seems, at least to me, that everywhere I turn I find information on how to prevent foreclosure of my house. It also seems that everywhere I look I find information on how to stay within a budget (usually, the best tip is don't go to Starbucks!). However, when reading these articles there is almost never any good information on what to do if someone has credit card debt - or any other debt that is not going to be solved by skipping the $5 daily Latte. Clearly, if there are millions of houses going into foreclosure then there are at least that many people with credit card (or other unsecured debt) problems.
With that being the case what should someone do if they experience some sort of financial hardship and are either behind in their payments or likely will be in the future? There are some out there who would say that the person with the credit card debt should take on a second or third job and if necessary sell their car and pawn their wedding ring. However, with the economy in the shape it is that is wishful thinking for many people who would love to have even one job and who quite possibly have already pawned their ring or sold it to the "We Buy Gold" people. Also, if you live in Phoenix you most likely aren't going to get a job if you don't have a car so losing the car isn't the best option (there are some cities with nice public transportation where its possible to live without a car - Phoenix is certainly not one of those cities).
The best option for someone with large amounts of debt that they can no longer afford is to settle those accounts. That can mean scrimping and saving to make an extra $100 payment every month. In many situations though the minimum payment isn't even possible let alone an additional payment on top. In that case the best option is to set up an appointment with a private company who settles unsecured debt and discuss your options.
I highly recommend doing your homework when choosing a company as there are many out there who will make the situation even worse. For example, many of the debt reduction companies are actually affiliates of the banks that issue the credit cards. Clearly, you don't want to talk to one of those companies. There are also many scams to be on the lookout for. In one popular scam the scam artist requests that funds to pay off the credit card companies be sent to an account that they control. After funds are sent, the scammer is on his merry way to Costa Rica or wherever else scammers like to go. All the while, of course, no accounts are settled. Other scams involve upfront fees and also end up with no accounts settled and the scam artist in Costa Rica.
Our company only charges as a fee a portion of the debt that we are able to negotiate away. That means that you don't pay anything up front and won't pay anything at all if we are not able to save you money. Of course I'm biased, but I feel that is the best situation for the client as the interests of the client and the debt solution company are perfectly in alignment. Also, by using a third party trustee account you can be sure that we're not planning on just running off with your money. If interested in setting up an appointment with our debt specialists call 480 532-7999 anytime for a consultation.
Of course, our company is not the only good debt settlement company out there and regardless of whether you end up using our company or not it is important to do your homework.
With that being the case what should someone do if they experience some sort of financial hardship and are either behind in their payments or likely will be in the future? There are some out there who would say that the person with the credit card debt should take on a second or third job and if necessary sell their car and pawn their wedding ring. However, with the economy in the shape it is that is wishful thinking for many people who would love to have even one job and who quite possibly have already pawned their ring or sold it to the "We Buy Gold" people. Also, if you live in Phoenix you most likely aren't going to get a job if you don't have a car so losing the car isn't the best option (there are some cities with nice public transportation where its possible to live without a car - Phoenix is certainly not one of those cities).
The best option for someone with large amounts of debt that they can no longer afford is to settle those accounts. That can mean scrimping and saving to make an extra $100 payment every month. In many situations though the minimum payment isn't even possible let alone an additional payment on top. In that case the best option is to set up an appointment with a private company who settles unsecured debt and discuss your options.
I highly recommend doing your homework when choosing a company as there are many out there who will make the situation even worse. For example, many of the debt reduction companies are actually affiliates of the banks that issue the credit cards. Clearly, you don't want to talk to one of those companies. There are also many scams to be on the lookout for. In one popular scam the scam artist requests that funds to pay off the credit card companies be sent to an account that they control. After funds are sent, the scammer is on his merry way to Costa Rica or wherever else scammers like to go. All the while, of course, no accounts are settled. Other scams involve upfront fees and also end up with no accounts settled and the scam artist in Costa Rica.
Our company only charges as a fee a portion of the debt that we are able to negotiate away. That means that you don't pay anything up front and won't pay anything at all if we are not able to save you money. Of course I'm biased, but I feel that is the best situation for the client as the interests of the client and the debt solution company are perfectly in alignment. Also, by using a third party trustee account you can be sure that we're not planning on just running off with your money. If interested in setting up an appointment with our debt specialists call 480 532-7999 anytime for a consultation.
Of course, our company is not the only good debt settlement company out there and regardless of whether you end up using our company or not it is important to do your homework.
Monday, February 21, 2011
Short Sale After Bankruptcy?
I had an interesting conversation with a client the other day. This lady's question was that she was interested in doing a short sale instead of a foreclosure but wasn't sure the point since she and her husband had already gone through a Chapter 7 (liquidation) bankruptcy.
One side of this discussion states - why bother? In going through a bankruptcy an individual is bringing about many of the things that we work with our clients to avoid via a short sale instead of a foreclosure. For example, a bankruptcy will have a very negative effect on your credit (although, in many cases the actual bankruptcy will have little effect since the credit has been thoroughly decimated leading up to the bankruptcy) and leads to a negative public record that could be searched by potential landlords, or even potential employers. With a bankruptcy already on the record is it really worth it to go through the hassle of a short sale?
Another school of thought is that a short sale will always be better than a foreclosure and one negative public record is better than two negative public records. Is it worth the time and effort to have, what is most likely, a marginally better credit score and public record? That all depends on the homeowner in question.
Personally, I think in many cases it would be worth the effort. For one, It is likely that the effort from the homeowners won't be too intense since many of the documents needed to be gathered for the bankruptcy are the same documents needed for a short sale. Banks also tend to approve short sales quickly when they are filed by a homeowner just out of bankruptcy. Additionally, there is the HAFA program which, if the homeowner qualifies, enables the homeowner to receive up to $3,000 in compensation upon successful completion (many investors can usually guarantee that figure - even if the government approval were to not be granted for whatever reason - including our firm).
The idea of improving ones credit (even if it is marginal), while making $3,000 for a little bit of work that is already most likely completed doesn't seem too bad. Obviously, however, individual circumstances will most definitely apply. I highly recommend discussing the implications with a qualified bankruptcy attorney.
One side of this discussion states - why bother? In going through a bankruptcy an individual is bringing about many of the things that we work with our clients to avoid via a short sale instead of a foreclosure. For example, a bankruptcy will have a very negative effect on your credit (although, in many cases the actual bankruptcy will have little effect since the credit has been thoroughly decimated leading up to the bankruptcy) and leads to a negative public record that could be searched by potential landlords, or even potential employers. With a bankruptcy already on the record is it really worth it to go through the hassle of a short sale?
Another school of thought is that a short sale will always be better than a foreclosure and one negative public record is better than two negative public records. Is it worth the time and effort to have, what is most likely, a marginally better credit score and public record? That all depends on the homeowner in question.
Personally, I think in many cases it would be worth the effort. For one, It is likely that the effort from the homeowners won't be too intense since many of the documents needed to be gathered for the bankruptcy are the same documents needed for a short sale. Banks also tend to approve short sales quickly when they are filed by a homeowner just out of bankruptcy. Additionally, there is the HAFA program which, if the homeowner qualifies, enables the homeowner to receive up to $3,000 in compensation upon successful completion (many investors can usually guarantee that figure - even if the government approval were to not be granted for whatever reason - including our firm).
The idea of improving ones credit (even if it is marginal), while making $3,000 for a little bit of work that is already most likely completed doesn't seem too bad. Obviously, however, individual circumstances will most definitely apply. I highly recommend discussing the implications with a qualified bankruptcy attorney.
Tuesday, February 15, 2011
Initial Consultation
I had a question the other day regarding what we go over in our consultation with our clients.
Typically, our clients are facing financial hardship of one form or another and are usually not making payments on their house, or in some cases are contemplating not making further payments on their house. They typically, are leery of foreclosure which is why they contacted us in the first place but do not know all of the options out there and don't typically know what path they want to take. In this situation our role is to help the homeowner find the solution that best suits their needs.
It is our job in this meeting to not tell the homeowner what they should do but to listen to what they want to do. We spend the first part of the meeting listening to the homeowners situation. Next we ask the homeowner what their desired outcome is. From this conversation we can usually get a pretty good idea what the best solution for this homeowner is. For example, if they are dead set in staying in their home then I'm certainly not going to recommend a short sale! Or, if the homeowner simply has no way of affording the payment - even if the loan were to be modified, then we'd of course, recommend against wasting time on a loan modification or attempting to talk to the bank about a forebearance. However, it's important that we NEVER want to force the homeowner to do anything they don't feel good about because at the end of the day the homeowner has to be committed to the plan of action and I don't want to force anyone to do something that they might regret. Not only does that usually lead to an unhappy customer but it also is likely to lead to an unsuccessful conclusion since so much of the work has to be done by the homeowner - I can and do help but I can't do everything!
After the homeowner has opened up about their situation there is usually a frank discussion about what the different options are. For most folks the options are died in lieu of foreclosure, loan forebearance, loan modification, short sale or, as unappealing as it sound, wait until kicked out by the bank through the foreclosure process. Each does have its upsides, but of course, they also have their downsides. I view my job as being able to clearly explain each of those options and to give an informed opinion on the risks involved with choosing a particular option - including the chance that we might be unsuccessful, as well as what a successfull pursuit of that particular option would look like - and what will be needed from all parties to make it happen.
It certainly is an important decision and I feel very privileged to be called upon to help these folks in their time of need. If you or anyone you know is going through this situation please contact me at patrick.bowes@mcahomes.com or go to mcahomes.com and I'd be happy to go through your options in detail and help you work out a win-win situation; free of charge.
Typically, our clients are facing financial hardship of one form or another and are usually not making payments on their house, or in some cases are contemplating not making further payments on their house. They typically, are leery of foreclosure which is why they contacted us in the first place but do not know all of the options out there and don't typically know what path they want to take. In this situation our role is to help the homeowner find the solution that best suits their needs.
It is our job in this meeting to not tell the homeowner what they should do but to listen to what they want to do. We spend the first part of the meeting listening to the homeowners situation. Next we ask the homeowner what their desired outcome is. From this conversation we can usually get a pretty good idea what the best solution for this homeowner is. For example, if they are dead set in staying in their home then I'm certainly not going to recommend a short sale! Or, if the homeowner simply has no way of affording the payment - even if the loan were to be modified, then we'd of course, recommend against wasting time on a loan modification or attempting to talk to the bank about a forebearance. However, it's important that we NEVER want to force the homeowner to do anything they don't feel good about because at the end of the day the homeowner has to be committed to the plan of action and I don't want to force anyone to do something that they might regret. Not only does that usually lead to an unhappy customer but it also is likely to lead to an unsuccessful conclusion since so much of the work has to be done by the homeowner - I can and do help but I can't do everything!
After the homeowner has opened up about their situation there is usually a frank discussion about what the different options are. For most folks the options are died in lieu of foreclosure, loan forebearance, loan modification, short sale or, as unappealing as it sound, wait until kicked out by the bank through the foreclosure process. Each does have its upsides, but of course, they also have their downsides. I view my job as being able to clearly explain each of those options and to give an informed opinion on the risks involved with choosing a particular option - including the chance that we might be unsuccessful, as well as what a successfull pursuit of that particular option would look like - and what will be needed from all parties to make it happen.
It certainly is an important decision and I feel very privileged to be called upon to help these folks in their time of need. If you or anyone you know is going through this situation please contact me at patrick.bowes@mcahomes.com or go to mcahomes.com and I'd be happy to go through your options in detail and help you work out a win-win situation; free of charge.
Wednesday, February 2, 2011
Loan Modifications
You know, loan modifications should be a legitimate alternative to foreclosure or short sale for homeowners who can't afford their payments, yet want to stay in their house. Alas, the world does not work as it should - especially when the government wants to "help".
I'll skip the stats for now and illustrate a comment that came from a senior manager at a local non-profit, community housing organization. In our discussion she mentioned that the majority of people seeking foreclosure relief help simply didn't qualify. Those that did had to endure painfully long waits that could stretch over a year. Finally, the majority of those that were approved just ended up defaulting on their payments again - sometimes within months and dropped out of the system.
The sad thing is that the majority of these folks will go into foreclosure. These homeowners tried hard to do what the banks and the government wanted them to do but were let down. "Wouldn't it be great" ideas dreamed up in Washington don't work (and waste LOTS of money) when they try and tell the market what to do, or how the market should work.
Best advice if you are in a situation where you are facing a potential foreclosure is to look into all of your options. Please don't assume that one magic program will be the cure to all that ails. Especially when it comes from Washington...
Check out this article for a little further color
I'll skip the stats for now and illustrate a comment that came from a senior manager at a local non-profit, community housing organization. In our discussion she mentioned that the majority of people seeking foreclosure relief help simply didn't qualify. Those that did had to endure painfully long waits that could stretch over a year. Finally, the majority of those that were approved just ended up defaulting on their payments again - sometimes within months and dropped out of the system.
The sad thing is that the majority of these folks will go into foreclosure. These homeowners tried hard to do what the banks and the government wanted them to do but were let down. "Wouldn't it be great" ideas dreamed up in Washington don't work (and waste LOTS of money) when they try and tell the market what to do, or how the market should work.
Best advice if you are in a situation where you are facing a potential foreclosure is to look into all of your options. Please don't assume that one magic program will be the cure to all that ails. Especially when it comes from Washington...
Check out this article for a little further color
Wednesday, January 26, 2011
Foreclosure Prevention Fraud
I want to touch upon a subject that has come up a few times in the news recently, namely, fraud in the foreclosure prevention arena.
If there is one thing we know about scam artists its that they like to target people who can least afford to be scammed (except those Nigerian kings - they're happy scamming anyone). This certainly applies to those going through the foreclosure process.
One of the most popular scams is when a "loan modification company" informs the homeowners that they need an upfront fee in return for their help in reducing the mortgage payment. Typically, these scammers will promise interest rates down to zero percent and principal reductions. If this is the case run - don't walk away because 95% of the time you are being blatantly scammed. The reason is loan modifications take a ton of paperwork and most people don't qualify. If you do qualify for a loan modification that almost always only affects the interest rate - it is extremely rare to get a principal reduction on a loan modification.
The worst thing about this fraud, however, isn't the money that you are out up front its the time that you have lost. Often times the homeowner thinks everything is going along swimmingly only to find out as their house goes to auction that they have been scammed. Once the house is in auction that's all she wrote and the house goes to the highest bidder. Not only is the homeowner out their initial investment but they have lost the chance to avoid having a foreclosure on their permanent record.
If there is one thing we know about scam artists its that they like to target people who can least afford to be scammed (except those Nigerian kings - they're happy scamming anyone). This certainly applies to those going through the foreclosure process.
One of the most popular scams is when a "loan modification company" informs the homeowners that they need an upfront fee in return for their help in reducing the mortgage payment. Typically, these scammers will promise interest rates down to zero percent and principal reductions. If this is the case run - don't walk away because 95% of the time you are being blatantly scammed. The reason is loan modifications take a ton of paperwork and most people don't qualify. If you do qualify for a loan modification that almost always only affects the interest rate - it is extremely rare to get a principal reduction on a loan modification.
The worst thing about this fraud, however, isn't the money that you are out up front its the time that you have lost. Often times the homeowner thinks everything is going along swimmingly only to find out as their house goes to auction that they have been scammed. Once the house is in auction that's all she wrote and the house goes to the highest bidder. Not only is the homeowner out their initial investment but they have lost the chance to avoid having a foreclosure on their permanent record.
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