Archive for Stop Foreclosure Help

FDIC, Bank Takeovers, and the Foreclosure Process

©kenyee - flickr

©kenyee – flickr

With the significant increase in bank failures due to the financial collapse of 2008, more loans are being taken over by the Federal Deposit Insurance Commission. While the government stepping in may make the transition of loans from failed banks to solvent banks a little easier, in cases of default and foreclosure the situation can become more complicated.

In 1942, the Supreme Court decided that any secret or implied agreements would be precluded that had the effect of reducing or diminishing the FDIC’s interests. This has come to be known as the D’Oench, Duhme doctrine, and has been further codified into the federal statutes.

In many cases, if a bank transfers its assets to another financial institution or corporation, homeowners will be able to bring claims against the original lender or the assignee of the mortgage and note. But when a bank fails, it is taken over by the FDIC, a government agency which is granted immunity in many cases.

Federal regulations give the FDIC immunity from a number of claims. Homeowners may be unable to bring any claims against the FDIC for assets of the failed bank unless the agreement is in writing and meets a number of other requirements. These requirements are the following:

 

No agreement which tends to diminish or defeat the interest of the Corporation in any asset acquired by it under this section or section 11, either as security for a loan or by purchase or as receiver of any insured depository institution, shall be valid against the Corporation unless such agreement–

(A) is in writing,

(B) was executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the depository institution,

(C) was approved by the board of directors of the depository institution or its loan committee, which approval shall be reflected in the minutes of said board or committee, and

(D) has been, continuously, from the time of its execution, an official record of the depository institution.

 

There are also a number of additional common law doctrines that smaller courts have relied upon when granting the FDIC immunity from homeowner or debtor lawsuits. These are termed “super holder-in-due-course” or “federal holder-in-due-course” doctrines, and allow the FDIC to claim holder-in-due-course status even if it does not meet the requirements for such status under the Uniform Commercial Code.

This immunity also typically extends to any future financial institution that purchases the assets of the failed bank from the FDIC. In most cases, the government only temporarily takes over the bank, makes sure it can keep operating for the short term, and then sells the remaining assets to other banks. Companies that purchase mortgage loans or other debts will be given immunity from claims that the FDIC would be immune to, making it even more difficult for borrowers to hold anyone accountable for actions taken before the bank failed.

Thus, homeowners may have a very difficult time bringing claims against the FDIC for the actions of the failed bank. However, there are a number of exceptions to the broad grant of immunity. Although they may only apply in a small number of cases of foreclosure, it is worth the effort for homeowners to look into these exemptions and find out if their claims against the original lender or failed bank may survive the FDIC receiving the bank.

Today I Was Forced To Serve A Five Day Eviction Notice

Since I was going through the process of evicting a non-paying tenant today, I thought I would share my experience and post the paperwork used. As this process moves forward, I will continue to post information about the entire process and the eviction results. Quite honestly, we are hoping this is enough to scare the tenant into paying the rent, so we don’t have to evict.

©michealjhonson98 - flickr

©michealjhonson98 – flickr

The 5 Day Eviction Notice is what we are required to post in IL when a tenant has not paid rent. This document is not used for other tenant violations. It states the amount of rent past due and gives five days for the tenant to pay the rent. In this case, the tenant was 4 months behind and did not return multiple phone calls or emails.

We hate to evict people, but in this case, it seems to be the only option, since it’s been 4 months since her last payment and she is not responding to our communications. In the past, she was normally late on payments and had been up to 3 months behind, but she usually responded when we called and she sent payments when they became available. Today I made a final attempt to call and found the phone was no longer in service and the email address is no longer valid. Tomorrow I will take a drive past the home to see if she is still living there and I will post the eviction notice on the door of the property.

When serving an eviction notice in IL, we need to print two copies, one for the tenant and one for our records. Once the 5 day eviction notice is served, the Proof of Service page is then signed and notarized. All of these documents are needed when we go to court to get the official eviction.

Keep in mind, if you want to use these forms, you will need to verify that they will work in your state, because these were intended for the state of Illinois. Simple fill in the blank spaces , everything in [brackets], and change the dates. Also, make sure you read through everything to make sure it’s relevant to your situation.

This document is meant for display purposes only. If you decide to copy and use these documents, please have them reviewed by your own attorney.

5 DAY EVICTION NOTICE

TO: [Tenant’s Full Name]
[Tenant’s Address]
[City, State, Zip]

YOU ARE HEREBY NOTIFIED THAT there is now due and owing the undersigned landlord in the sum of ____________________, being rent for the premises situated in the City of [Property City], County of [Property County], and State of Illinois, being described as follows:

[Property Address]
[City, State, Zip]

And you are further notified that payment of said sum has been and is demanded of you, and that unless payment thereof is made on or before the fifth day after receipt of this notice unless the fifth day falls on a Saturday or Sunday or holiday, then on or before the following weekday, your possession of the premises will be terminated.

ONLY FULL PAYMENT OF THE RENT DEMANDED IN THIS NOTICE, WITHIN FIVE DAYS OF THE DATE OF SERVICE OF THIS NOTICE, WILL WAIVE THE LANDLORD’S RIGHT TO TERMINATE THE LEASE UNDER THIS NOTICE, UNLESS THE LANDLORD AGREES IN WRITING TO CONTINUE THE LEASE IN EXCHANGE FOR RECEIVING PARTIAL PAYMENT.

Dated this _______ of November, 2009

By: [Landlord Signature]_________________________
[Landlord Printed Name]

PROOF OF SERVICE

STATE OF ILLINOIS )
) SS
COUNTY OF [County Where Notorized] )

[Name of Person Serving Notice], being duly sworn, on oath deposes and says that on the 5th of November, 2009, [He or She] served the above notice on the tenant named above as follows:

_________1) by delivering a copy thereof to the above named tenant;

_________2) by delivering a copy thereof to a person above the age of 13 years, residing on or in charge of the above described premises;

_________3) by sending a copy thereof to said tenant by certified mail, with request for return of receipt from the addresses;

_________4) by posting a copy thereof on the main door of the above described premises, no one being in actual possession thereof.

Subscribed and sworn to me this 5th of November, 2009.

____________________________
NOTARY PUBLIC

My commission expires: ____________________________

Why There Are So Many Foreclosures And How To Stop Them With A Loan Modification

Last month there were more foreclosures then ever before, which means they are increasing not decreasing, as some might say.  Obviously homeowners want to avoid foreclosure as do the banks.  Lenders do not want foreclosures written on there books, because it runs the risk of the bank failing.  Homeowners usually do not want to lose their homes.  This means if the two work together early enough, a solution should present itself.

Most of the foreclosures are due to bad lending practices at the start of the lending process.  Not too long ago, people considering buying a home had to show a 30 percent down payment, as well as one year of work pay stubs; this proved that they did have cash, were good at money management and would likely keep up with loan payments.

Equal opportunity in lending laws meant that this was a discriminatory action.  At the same time loan originators were getting paid large commissions, based on the value of the loan.  So with those two items combined, it was much easier to get a loan, you didn’t have to prove as much and large loans were given out to people that could not afford them.  These loans were commonly referred to as “liar loans.”  Most of the bank failures today have come from banks leveraging mortgage driven securities that were run into the ground because of these bad loans.

Millions of new homeowners were not totally informed on what they were signing when getting their loans.  They ended up getting adjustable rate mortgages, usually with interest only introductory periods.  When the rates adjusted or the interest only period ran out their housing bill usually would triple and most homeowners could not keep up with the payments.

©nami 1979 - flickr

©nami 1979 – flickr

If you’re a homeowner and find yourself in this situation a loan modification may be your answer.  A loan modification is a negotiation technique, were you can get various terms of your loan modified.  Think of it as a refinance option, were you can start affording the payments on your home again.

Most mortgage loans are built around two items, the interest rate and the time period over which the loan has to be paid off.  The interest rate is the percentage of the remaining balance that the bank takes as a profit on each payment, if your interest rate is to high, you will find that you end up paying much more than your house is worth.  Most interest rates are compound interest as well and over the lifetime of most mortgages, that can add up to a very large amount.

Loan modifications will either help reduce your interest rate or extend the terms of the loan.  To get a loan modification package you will have to prove to the bank that you have run into financial hardship and difficulties, that have lowered your monthly income significantly, which has kept you, or will keep you from making your monthly payments.

You will want to get help from a loan modification specialist to do the negotiating with your lender.  Especially these days, when the banks are so overwhelmed with people calling in for help, they usually just tell victims that they are “working” on the file, or it’s in “processing” and they are waiting for an answer. When you are in foreclosure, when the lender doesn’t help you immediately, you need to find help elsewhere.

Working with a loan modification specialist can help the process speed up because these people work with the banks all the time, the bank employees know them and will speak to them and get a plan worked out for you.  You don’t want to be stuck sitting around waiting for your lender to “approve” a loan mod, while they are secretly planning on selling the home out from under you. Having a professional negotiator in your corner is the way to go, if you want to get a loan modification before your home sells at auction.

Understanding The Foreclosure Process And Using It To Your Advantage

©insurancebrokersonline1 - flickr

©insurancebrokersonline1 – flickr

As most of you probably already know, your mortgage company will not accept your payments during the foreclosure process. The reason your mortgage company will not accept your payments is because they need to either be paid in full for all the arrears, or an acceptable repayment plan needs to be approved. If they accept your payments otherwise, you would have a probable excuse to challenge the foreclosure in court, using the defense they they agreed to a modified payment. Your evidence would be the payment they accepted that was less than the amount owed. So, for those of you that have not had a payment rejected yet, be expecting it. Most homeowners in foreclosure live in their home for 3-24 months without making a single loan payment, before getting evicted.

To help you better grasp the foreclosure process, I’ll quickly review the 4 basic steps of foreclosure. These are not 100% correct for every situation, but I’ve tried to describe these to be as accurate as possible for every situation.

Step one is the filing of the foreclosure lawsuit or lis pendens, or other formal and public notification of the missed payments. In most cases this happens after three missed mortgage payments.

Second is a court case for you to defend yourself against the foreclosure in the event it was not a legal foreclosure. There are 100’s of legal foreclosure defenses and virtually unlimited ways to remain in your home, if you comprehend the court process and use it to your advantage. This step may need to be filed in court on your part if you are in a non judicial state.

Step number three in foreclosure is the auction or sheriff’s sale. This is when the property is sold at auction to the highest bidder. Many people believe there are actually people bidding at these sheriff sales and someone else is going to buy their home; this is usually not the case. At the sheriff sale, the highest bidder is usually a representative from the mortgage company or real estate agent. In almost every case we see, the mortgage company gets the home back and it becomes a REO (Real Estate Owned) listing for the mortgage company. After the sale, your mortgage company will own the home and they will try to sell it as quickly as possible.

In some states, there is a redemption period, either before or after the auction. In these states, foreclosure victims are allowed up to 1 year to get their home back, depending on the exact laws. To redeem the home, the homeowner must come up with enough money to purchase the home from the lender for the total amount owed. In some cases, the previous owner may get the home at a reduced price, or even by just paying the total arrears.

The last step in this process is the eviction. This is when you will be forced to leave your home. It’s usually best to vacate before the eviction process, because if you don’t, the local sheriff and an eviction crew will show up and forcefully evict you and all your stuff from the house. Most states require a min. of three day notice before eviction and some require a 7, 10, or 30 day notice.

During the foreclosure process, homeowners should be working with their mortgage company to try and arrange a loan modification. This is when the terms of the loan are permanently changed to make the loan more affordable. Because of mortgage modifications, many foreclosure victims are able to save their home and get a lower payment. If your mortgage company does not agree on a modification, don’t be afraid to hire a professional modification agent to do it for you. Trying to get a mortgage modification by yourself can be very frustrating, time consuming, and can cost you a lot more money in the long run. A negotiator can get you a betterpayment and can get the case resolved much more quickly. Saving your home and getting a lower monthly payment is easily worth the cost.

In cases when you are not able to keep your home, it’s important try and recover from your hardship while you are in the foreclosure process. When you are not making your mortgage payments, you should be saving as much money as possible so you can move on when that time comes. Don’t spend this extra money frivolously!

If you are losing your home, then it’s time to take a serious look at your spending habits and determine which expenses are 100% required}. In nearly every foreclosure case I see, there are 100’s or even 1000’s of dollars spent on uncalled-for items in the monthly budget. When you are facing foreclosure, you don’t need to keep your $200/month TV service! You can also stop buying songs on the Internet and cancel the Internet services on your cell phone! Take a good look at each and every monthly bill and decide if your life will go on without it. If you can live without the expense and it will not jeopardize your job or your family’s health, then you need to stop spending money on it!

Even if you think you can afford these extra luxury expenses, you need to get real. If you could afford them, you wouldn’t be facing foreclosure! Use the extra money to pay off your other bills, starting with the highest interest rate credit cards first. Getting out of debt will help your credit recover more quickly and when you do get a new mortgage payment, it will be more affordable.

When you do rent or buy your next home, it’s important to buy one that is affordable and will not stress your budget. You should not be living from one paycheck to the next! Make sure you have enough disposable income to put extra cash away each month. You should have a min. of 15% extra income at the end of each month that goes directly to your savings/retirement account. If you get back into a situation where you are struggling each month to make a mortgage payment, you’ll never be able to get ahead of the game.

These quick tips can even help you stop foreclosure, if you make a change in time. But for others, you will have to move on and start a new life in a new home. Use this advice and get your credit back on track by lowering your expenses and eliminating all those frivolous and unnecessary expenses.

REFINANCE WHILE INTEREST RATES ARE LOW

©David Andrades1 - flickr

©David Andrades1 – flickr

 If you are a homeowner with mortgage payments that are becoming hard to manage, or are in foreclosure, consult with a loan modification company today.  You may be eligible for a refinance or could be able to buy some time to get back on track.  The US government is encouraging lenders to work with struggling homeowners to help them stay in their homes.  With falling property prices in most regions in the United States, refinance is becoming more and more difficult for borrowers who could potentially owe more than what their property is worth, or more than what the price the property was purchased for as little as 3 years ago. 

This is a problem facing many American households, and even those not in or near to loan default are feeling the pain of the housing decline.  When a property goes into foreclosure, typically the bank or lender wants to sell it as soon as possible because they do not want to deal with the day-to-day management of the asset, and would much rather prefer to sell it to get it off its balance sheet.  When you have so many properties going into default in many neighborhoods across the country, even stable homes with owners that paying on-time are affected by comparable sales that are coming in far lower because of distressed sellers in the market.  This makes selling very difficult because those owners are competing with properties that are priced very aggressively by banks and lenders who are basically fire selling these assets. 

Because interest rates are now on the rise, the Obama administration is in an even more precarious position when it comes to limiting the amount of borrowers in default.  Although the US government is now encouraging banks to works with struggling borrowers, higher interest rates are making their job much more difficult.  With low interest rates, homeowners are more encouraged to refinance into more manageable monthly payments, thus making it easier to afford their homes and have time to get caught up on missed payments if they were behind.  It also makes it easier for real estate investors to have more deals make sense with cheaper money to be borrowed, instead of the increasing cost of money today.  Combine this with a credit market that is basically dried up and you have a very difficult environment with which to trade properties.  This makes things even more difficult on those homeowners trying to sell their properties – the buyer pool is virtually non-existent due to the difficulty of obtaining a mortgage, and on top of that they are competing with comparable properties that are selling for fractions of what they were purchased for earlier in the decade. 

Last week rates on the 30-year fixed rate mortgages rose to 5.79% from 5% just weeks earlier.  This spike in rates has cooled hopes of refinancing for thousands of homeowners, and for those with adjustable-rates, their monthly payments are now that much higher and hard to handle.  As bond yields continue to spike, mortgage rates have continued their upward trend.  Earlier in the spring mortgage rates fell below 5% which was the lowest decline in 50 years. 

Why the Foreclosure Problem is Not Going Away

The foreclosure crisis is an epidemic that is affecting every region in the United States, and while the current crisis outweighs most declines in the real estate market up until this point in history, foreclosures will always follow the dream of home ownership for many Americans.  Typically it only takes 3-6 missed payments for a bank or lender to initiate foreclosure proceedings on a property.  Because so many Americans are out of work and house prices continue to decline, many purchasers from the beginning and middle of the decade are finding payments to be unmanageable and are stuck under a wave of debt. 

©ghhomebuying - flickr

©ghhomebuying – flickr

The Obama administration is doing what it can with the problem it inherited in many ways.  On top of the skyrocketing number of loans in or going into default, the credit markets are essentially broken, with credit becoming almost impossible to access, even for the most credit-worthy borrowers.  No one knows who is to blame for the current state of the market, but it is clear that conditions are bad for both lender and borrower, and is especially difficult on the homeowner who sees that future mortgage payments will be too high to manage, but cannot refinance or sell their property in time for a price that will get them out of the situation.

As long as Americans dream of home ownership, foreclosures will be soon to follow.  While credit was easy to access 5 and 10 years ago, that well has dried up, and the market is correcting in a very severe manner affecting even those with good credit that had little to do with the current housing crisis.  Property values have ceased to increase, and many are lucky to sell for a price they paid as long as 5 years ago.  The bottom line is that foreclosure and borrower default is a part of home buying.  The luckiest people who can pay for a property still have to worry about defaulting on tax bills, association fees and construction liens.  It is an issue that goes hand in hand with real estate investing, just as potential gains and losses are part of investing in stocks or commodities.

However, never before has our federal reserve and banking system been flooded with so many defaults at once.  Many banks are desperately trying to sell off those toxic assets to clean up their balance sheets, but are finding that the market for these products is so low that the bank could risk going under if they were to realize these massive losses in home value.  There are many investors and bottom-feeding real estate investors who are interested in purchasing the properties at 50 cents on the dollar or less, but most banks are being given quite a bit of lead-way by the federal government, and many think have not been forced to feel the pain of the market as others have.  This reluctance to accept where the market will be for these assets is part of the problem, and as long as banks sit on the properties as REO’s the slower the nation’s housing recovery time will be. 

If you are in foreclosure or feel that your upcoming payments are going to be too difficult to manage, consult with a loan modification company as soon as possible, or contact your lender and see what options are available.  It is better to find out sooner rather than later so that you are prepared for what is to come.  You can still find time to stay in your property, and if you have missed payments, your lender may be able to provide time with which to work with you to get back on track.

SELLING A HOME THAT IS IN FORECLOSURE??

©ghhomebuying - flickr

©ghhomebuying – flickr

If you are behind on payments or facing foreclosure, it is not too late to find a solution.  There are hundreds of foreclosure help services that are competing for your business, and are capable of modifying your loan or consolidating your bills into one monthly payment.  Many are offering services with no up-front fees, and are able to work with you and your lender to buy some time to help you get back on track. 

If your home is listed on the market with a Realtor, you are most likely competing with other similar homes in the area.  Because the housing market is in such a difficult period, it is likely that your home could be sitting on the market for months before seeing any interest or offers.  Buyers are taking their time these days, and have many options to choose from.  Not only that, but it is more difficult than ever for an average borrower to get approved for a home loan.  Banks and mortgage companies are under water on many of the risky loans that were made 5 years ago, and the thought of taking on more risk is a very hard sell in today’s market.

The first thing to do is to make sure that your home is priced competitively.  If you list the property for a price that you know is high or above the market prices for recent sales, your home simply will not sell in today’s market.  You can be optimistic and some regions of the country are in better shape than others, but the time has long passed when you could list a property for a high or optimistic figure and bank on seeing offers within a week or two.   It could take months before you realize there is no activity and only then will it become clear that your property is overpriced.  So – LIST YOUR PROPERTY COMPETITIVELY!  The first offer you get might be the best one, and properties that sit on the market for a long time have stigmas attached to them after a while, and it is easy to deter a home buyer from your property because of an unusually long market time or listing history. 

A licensed Realtor can help you with pricing the property appropriately, and do not blame them if they think it is worth more than you do because they are probably right.   Most Realtors understand how difficult this period is for home sellers, and it is not in their best interest to tell you a home is worth less than you think.  Remember, their commission is higher the higher the property sells for, so they have no reason to tell you the home is worth less than it is.  Many Realtors would prefer to sell a property quickly, so you do want to make sure that the sales comparables or appraisals are checking out and accurate based on summary of your property.  But the sooner you sell your property the faster you may be able to capitalize on the next purchase, and instead of being taken advantage of you can get a property for a great price as most home are being discounted as much as 20-30% of the market listing prices.  It is a good way to turn lemons into lemonade and instead of losing wealth and facing foreclosure, you can buy at a discount and sell when the market shows signs of recovery or stabilization.

Loan Modification Questions and Answers

©cheesecurls62 - flickr

©cheesecurls62 – flickr

With the rise in foreclosures, more and more people are looking for solutions to stop the process.  As you search for help you may be thinking about a loan modification and if it is the right option for you.  There can be many pitfalls to the loan modification process; here I will go over some of the most commonly asked questions and answers on the subjects.

What is a Loan Modification?

A loan modification is where the mortgage holder, will adjust the note on your property, hopefully making the payments more convenient and affordable for the homeowners.  Most of the time the interest rate is lowered with a fixed loan program.  Homeowners may find advantages such as conversion of an adjustable loan into a fixed one, leaving you with a lower interest rate.  Loan modification can make they payments of your mortgage lower and possibly help you avoid foreclosure.

How Can I get A loan Modification?

In order to be eligible for a loan modification homeowners need to be 61 days or 3 full payments behind on their loan.  A minimum of 12 months needs to have gone by since the loan was first given.  The loan may not be in foreclosure when executed.  The modified mortgage should stay in the first lien position.

Also, the homeowner should not have another FHA-insured mortgage.  The borrower should be the owner occupant or commit to live in the property as principal residence.  The borrowers should have enough stable income, to keep up with the new payments.  They must prove that they can do so and that they have the income.

What is the Loan Modification Process?

-First the mortgagee will assess the mortgagor/borrowers financial state.
-An escrow analysis will usually be done by the mortgagee to compare if the actual escrow requirements correspond well to the delinquent payments that are being capitalized.
-The mortgagee has to comply with the disclosure laws or notice requirements of the state and federal government, each state law can vary.
-Then they will determine if records are needed to keep the first lien position.
-They will also make sure that the property is in good physical condition; home repair costs may not be included in the mortgage. Any negative physical conditions may impact the mortgagors ability to support financially.  Both the interior and exterior may be inspected.

Can I try and Get a loan modification on my Own?

Experts recommend that you do not try and get one without help.  It is hard to communicate with banks as an individual and to get them to work with you.  Especially when they are flooded with request all day long.  It is better to find some to help negotiate with the bank and get a work out plan or loan modification for you.

Should You Walk Away from the Distressed Property?

There are thousands of investors who are delinquent on both investment properties and primary residences, and many are simply packing up and walking away. This is due to a number of factors like relocation. If you have determined that your home is simply too expensive, walking away has become a popular decision for those who are finding it impossible to make good on the loans they borrowed.

©Agorfa DM - flickr

©Agorfa DM – flickr

Before doing so however, it is important to realize that you do have some options when it comes to staying in the home and that you can buy at a discount in the market today. The first step is to contact your mortgage company and see what kind of assistance they can offer. They may be willing to restructure your loan in a way that can get you caught up in a short period of time, at the same time put you on track to rebuild your credit score if it has fallen due to missed mortgage payments. If you have exhausted all options through your current lender and they are unwilling to offer any kind of alternative that makes sense for you, you should consider selling the property.

Because of the glut of foreclosures in most regions across the country, it is likely that the real estate will need to be priced aggressively and competitively compared to similar homes in the market. Consult with a trustworthy broker to determine the best asking price for the home to ensure a low market time and a clean sale. By selling the home you hopefully can pay off your bank. If it is worth less on the open market than what is owed as debt, your lender may be willing to cooperate with a loan modification and work with you and your buyer to come to an agreement on sale price. A short sale is simply when the bank is in a position to accept less for the property than what is owed to them on the primary lien. More and more banks are becoming more flexible when it comes to what they are willing to take.

If you find that you are unable to sell the property or receive any helpful terms from your current mortgage lender, and your credit is too screwed up to restructure the loan, walking away from a failed investment and cutting your losses is not the end of the world. Many purchasers have lived in their homes for years, and there is a sentimental attachment to the property after a while.

But if the home is too expensive on a monthly and annual basis and you simply cannot afford to stay in it, then there is no shame in making the decision to walk away before you dig a deeper hole and possibly one that you cannot get out of. You may be able to stabilize sooner the faster you cut loose of the bad investment and start to stabilize your financial situation.

Getting Money From Your House After Foreclosure

Many people don’t realize this, but there are several laws in place that prohibit your lender from taking advantage of you in a foreclosure situation. Every day, I hear: “My mortgage company just wants my house because it’s worth more than I owe”. In a few cases, this may be true, but legally, your lender must sell the home for it’s fair market value and pay you any proceeds over and above the amount owed. Banks may try and take advantage of the fact that most consumers don’t know their rights when it comes to foreclosure, but we’ll help you understand your rights and hopefully get some money back if you’ve lost your home.

©401(K) 2013 - flickr

©401(K) 2013 – flickr

The main issue we’ve seen is when a lender sells the home as quickly as possible, just to pay off the mortgage. They never seem to care about the previous homeowner and the money they are owed. For example, lets assume your home is worth $300,000, but your total payoff is only $275,000. Your lender has a legal obligation to sell the home for it’s fair market value, which is $300,000. This would mean you would get $25,000 back. What usually ends up happening is the bank accepts the first offer they receive of, lets say, $250,000, then they sue the home owner for a $25,000 deficiency judgment.

In a case where the bank should be paying $25,000 to the homeowner, they end up stealing the home and an additional $25,000, due to their refusal to sell the home at its fair market value!

If you are in the process of having your home foreclosed on, or if you have already lost your home to foreclosure, then it’s imperative that you know the current market value of your home. You may be owed thousands of dollars, in the event your home is, or was, sold for less than it was worth. There are many cases where previous homeowners have gotten settlements in excess of $50,000! Understanding your rights and the laws when it comes to facing foreclosure is probably one of the best ways of avoiding foreclosure altogether. If you didn’t understand your rights and you were taken advantage of, there is a chance you can get your home back, or at least sue the lender for their misconduct.

The best way to determine your home value is to is to get a full appraisal from a local, qualified appraiser. However, this can be somewhat costly, since you are/were facing foreclosure and it’s hard to justify “throwing good money after bad”. My recommendation is to get a BPO or Property Valuation from a qualified source. Our website can provide you with a good local recommendation if you need one. I do not recommend using an online service that offers a free value, because they are rarely accurate and do not take the condition of the home, or improvements into consideration.

Ultimately, if your lender broke the rules when foreclosing on your home, or sold the home afterwards for too low of a price, then you need to take action. We can not just sit back and let the lenders get away with breaking the laws and taking advantage of helpless borrowers. Take action today and force your lender to answer for their wrongdoings!