When President Obama came into office, the mantra and the rally call was for, “Change.” This philosophy is being implemented in many ways, both applauded and protested. Obama’s Federal Loan Modification is also about change, too, in the housing market, in your loan terms, and in your life.

The housing market has been impacted by the downward spiral of the economy. Housing sales are almost stagnant, market values have plummeted, and people are losing homes through foreclosures at a record rate. It is hoped that the Home Affordable Plan, which includes this mortgage modification plan, will stimulate the housing market, and subsequently, the economy.

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The first and most important step in getting your bank to work with you is communication. If you want to keep your house then you must tell the bank what is going on, why you are behind, and how you would like to try and bring your loan current. There are a lot of simple ways people use to bring their loan current in the first stages of foreclosure.

Since we are in the tax season, some people use their tax returns to bring their mortgage current. You can also search other places that you may be able to pull a lump sum of cash from in case of an emergency. For example, I have seen families use an advance on an annuity, in some cases you may be able to use funds from an IRA or a child’s college fund if you explain to you IRA administrator or the college fund that the funds are needed for an emergency, although you may be subject to some stiff penalties. The most common way to bring your mortgage current is to talk to the bank and ask them if you can make a repayment agreement.

A repayment agreement is an agreed upon payment plan between you and the bank which allows you to pay a little bit more than your normal mortgage payment each month until you have paid the full amount of money that you were behind on. This plan is usually best for someone who has had a temporary setback and they just need help getting back on their feet.

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Understanding the mortgage foreclosure process can help you if you want to save your home or if you are interested in buying property before it goes to the foreclosure auction. Each State has its own mortgage foreclosure laws and so you need to find out exactly what applies in your State.

However, there are two basic types of foreclosures:

• Judicial foreclosures
• Power of Sale foreclosures

In State that use judicial foreclosure laws this means that a lender has to go through the Court system to get a non-paying homeowner out of their house. This usually takes longer then a non-judicial foreclosure. Power of Sale foreclosures are based on the terms of the mortgage agreement and often can happen quite rapidly.

Generally what happens after your mortgage payments are 60 to 90 days behind is that a lender will have to send you a “Notice of Default” and provide you with the opportunity to reinstate your mortgage. At this point it is usually often difficult to reinstate a mortgage if you do not have equity in the property. During the time period when you failed to pay the mortgage, additional fees have accumulated in addition to interest, so now you owe significantly more than your last balance.

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What are the guarantees in a short sale?  I can only really think of one – I can guarantee that this thing won’t close in 7 days!  Ok, I’ve got two – I guarantee that if you don’t know what you’re doing or don’t hire someone who does then you are in for a long, wild ride!

Other than those there really aren’t any guarantees at all in short sales.  A lot of people find this a hard concept to grasp and as dark and foreboding as it may sound it really isn’t all that bad.

There is no guarantee that the property will sell BUT there never is.  You could put a house up for sale for one dollar and it doesn’t mean someone is going to buy it.    Most of our deals that we sell we have a contract on them within the first 60 days but our market may be different than yours and we market our properties very heavily.  Make sure that your property is properly marketed and distributed to as many buyers as possible.  Without a buyer there can never be a short sale!

After the initial purchase contract there is no guarantee that the bank will approve the deal.  BUT, your short sale negotiator should do everything in their power to keep the deal alive and negotiate as hard as they can to get the deal to close.  It’s usually a win-win for everyone involved and sometimes the bank just needs a little nudge and a little confirmation of that fact and you can get the approval that you need.

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The economy has been taking its toll on too many people in this country and it does not seem to be getting any easier in the near future. Companies are filing bankruptcy left and right and of course individuals are filing at an alarming rate. Credit card bankruptcy is a major issue in this country right now. Credit card companies are hiking interest rates to any who pay one day late and some are getting a rate increase just because.

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Bankruptcy is a legal way of dealing with your excessive debts which are beyond your capacity to pay, but it should always be your last option. Some take the opportunity of declaring bankruptcy earlier than expected to get rid of their debts immediately. However, this may have the opposite effect.

You should know that bankruptcy will take its toll on your financial life. Before you take this course of action, you should consider all other possible options and talk it over with your lawyer. So what makes bankruptcy so bad?

Declaring Chapter 7 bankruptcy, which can minimize or eliminate your debts, is your final admission of financial crisis. Once you’ve done this, your credit will suffer quite a bit. Your credit record will show a record of your bankruptcy for the next ten years, which can harm your credit rating and make it harder to get loans for housing, automobiles, and other necessities.

Although getting your credit back in good shape isn’t impossible, you may end up having to pay higher interest rates for the meantime. Banks and other lending agencies will always see you as a high-risk client, so you’ll have to deal with this, too.

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When you apply for a modification with your lender, you will be asked to supply certain loan modification forms. All lenders require the same basic information from a homeowner and this information is reviewed to determine your eligibility. Here is a list of the basic forms and just what is required on each one.

1. Borrowers Statement: This is your basic information like name, birth date, social security number, employment information. You also show any co-borrower information here, and list your dependents. This form tells the bank how long you have been on your job, if your spouse works and how many people live in your home.
2. Hardship Letter-Affidavit of Hardship: A brief description of your current financial situation and what has happened to cause the current mortgage payment to become unaffordable. This is your opportunity to explain your circumstances to your bank and gain their empathy. There are 3 critical parts to an effective letter, make sure you cover them all.
3. Financial Statement: The most important part of your application, this form really determines whether you will qualify for a loan modification or not. This is where you detail your income, expenses, assets-a basic snapshot of your financial situation. It is critical to work on this before you call your lender. Why? Because you need time to make any adjustments to your monthly budget so that you can meet the debt ratio and disposable income requirements. Learn about how to prepare you budget correctly in a handbook for homeowners.

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When a property is deemed to be sold as a short sale and a buyer is ready to buy the property, with the bank or lender having taken the decision to sell the property as a short sale, there are a few factors that might still surprise you, as far as the lender’s behavior is concerned. The fact is that you could be on either of the sides of the business, be a buyer or the seller, and still be surprised about some new developments. You need to always bear in mind that a short sale is the last option explored by the lender under any circumstances, hence he might try to defer it as long as possible. This is because the lender is still not sure that what he is doing is right for him, as he shall end up incurring some amount of losses due to a short sale.

A lender is always changing his short sale and loss mitigation process to figure out how he can reduce his losses. It will change at the decision of those assigned to review the pipeline disaster, which is their loss mitigation department. And, time and again, the changes usually are not for the best. They only further complicate the process. Since the banks are in the business to lend money; they are always exploring options to increase returns or reduce losses, and in the case of a short sale, the latter is more applicable.

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Foreclosures are always looked upon as a difficult time by any borrower and in case he has to face one, he always shall try to find reasons to stall the same. There are a few ways that you can actually stall a foreclosure and buy more time, so that you could work towards restoring some balance as well as make some arrangements whereby you could avert this tragedy. Whether or not you can stall foreclosure proceedings depends on a number of factors, like the type of foreclosure proceedings allowed in your state, how far behind you are on your payments and how willing your lender is to accept alternate payment arrangements.

One important step that you could resort to is to ask the lender to “produce the note”. Some lenders are not so organized and when it comes to old loans, they find that the promissory note could have been stacked up in places which are not easily accessible. Hence, by asking the lender to produce the note and filing a caveat in the court for the same, you could actually end up stalling the entire process for some time. This is very effective in the case of foreclosures which have legal implications, but in other cases, if not done properly, this could spell trouble for you for having wasted the court’s precious time. Another effective step is to take the route of bankruptcy.

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Short of losing a loved one, being told of a having an incurable disease or going through a divorce, foreclosure has to rank right up there in this category. These types of problems are part of life’s hurts that can unravel a person. I don’t know too much about the others, but I do know that the problem of foreclosure is a situation that can be fixed, and can be overcome in a relatively short period of time. Here is some after foreclosure help you can really use.

Let’s Expand On This…
There are so many different ways of completing a real estate transaction, but most of us have been brainwashed by banks, mortgage brokers and real estate agents that we think that you have to qualify for a mortgage to buy a home, and this is just not the whole picture. Homes are being transferred all the time without a traditional lender being involved. We are just not aware of this happening.

The Other Way…
Where all of us are concerned, we don’t know what we don’t know. If you have ever moved to a new location, once you found a way to get to a place you needed to get to, you probably went that same way for awhile because you knew you would not get lost (prior to GPS). Eventually, you found a way that actually saved you time and now you arrived at your same destination a lot quicker. This is what we are talking about here. A different way to go to accomplish buying a home.

Why Don’t I Know About This…
All the advertising for TV, Radio, Print and Internet mainly targets the traditional means of buying a home. Seldom do you hear about creative real estate financing, because the powers to be are established and well funded to promote their agenda only. They will not promote something that makes them no money. This in no way means that their methods are the best approach, it just means that they dominate the marketplace.

The Reality…

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