I am asked this question everyday. Not everyone is going to have the same alternatives. However, understanding your options is the first step to saving your home and your sanity. Is a Loan Modification for me? The Making Homes Affordable Plan is President Obama’s loan modification plan that helps homeowners who are struggling to make their monthly mortgage payment stay in their homes. This plan requires lenders to reduce monthly payments to no more than 31 percent of the homeowner’s monthly income. The first step in this plan is to lower the interest rate of the loan—sometimes as low as 2%. Second, if the mortgage payment is still too high with the reduced interest, then the loan may be extended to a 40 year term. Third, if the monthly payment is still not affordable, then there may be a reduction of the principal of the loan.

Is a loan modification what you need? It is if you want to keep your home. I see loan modifications being given every day, allowing homeowners to stay in the home they have worked so hard to keep. Why do I need to defend my foreclosure with an attorney? Once you are given a complaint to foreclose, take that complaint to an attorney so legal responses can be given to the complaint. The response should be specific to each point/count made in the complaint; and affirmative defenses should be formulated for your individual case. The attorney you hire should know foreclosure law, mortgage law and how to properly prepare and answer the foreclosure complaint. If you fail to answer appropriately you risk your right to bring any affirmative defenses against the lender.

Do you need to defend against a foreclosure? If you want to save your home and your credit, the answer is yes. Even if you are working on a loan modification, are in the middle of a short sale, or simply want to avoid foreclosure on your credit you must take legal action to prevent the foreclosure process. Should I agree to a short sale and leave my home? If you want to throw the towel in or you do not qualify for a loan modification, then a short sale is a good option. A short sale is when a lender accepts less than what you owe on the property and agrees to the sale of your home. With a short sale, you need to find a realtor experienced in short sales; and an attorney who can properly negotiate the short sale with your lender. The short-sale process is similar to a loan modification and must be properly executed so as not to delay the closing and ultimately lose the interested buyer.

Should I file Bankruptcy? If so, when and which Chapter should I file? Bankruptcy is a perfectly legitimate way to stop foreclosure, put an end to lawsuits, protect paychecks from garnishment, and regain control of your financial situation. However, this should be your final option after having tried reaching a loan modification, you have defended your foreclosure with a real estate attorney and time is ticking towards the foreclosure sale date of your house. In the Chapter 7 Bankruptcy there is no loan modification option and if you stop paying your mortgage you could lose your home. In the Chapter 13 Bankruptcy you can save your house and you are given time to pay off your debt. Do not lose hope. Changes and new programs are being offered to help homeowners every day. Even though this is a time of great challenge, do not forget the true meaning of life—the love of your family, the beautiful children you may have and the beautiful place you live in. Fight for what you want, exercise, regularly, read happy books, and watch the program Funniest Home Videos. Soon you’ll be smiling again!

Do not hesitate to e-mail me at dania@fap-law.com or call me at 305-254-4492 for an appointment. The initial consultation is free so you have nothing to lose and only knowledge to gain. Dania S. Fernandez & Associates, PA 10205 South Dixie Highway, Ste. 204 Pinecrest, FL 33156 <www.daniafernandez.com>

Due to the continuing economic depression, more and more people are losing their homes. The major reason for this is mortgage payments delinquency. Homeowners who have suddenly found themselves out of work or undergoing some financial difficulties are the ones who are experiencing this crisis. This leads to their properties being subjected to a foreclosure and later on, to a Real Estate Owned Sale. You might ask, what is the difference between a foreclosure and Real Estate Owned (REO) sale?

Here are the differences between a Foreclosure and an REO:

1. A foreclosure is a home that is not yet owned by the bank. Most homeowners attempt to sell their homes through a short sale, selling less than owed and seeking forgiveness of unpaid debt from the bank, while in an REO, the bank already owns the property and is motivated to sell it as soon as possible.

2. Homes sold through foreclosure are those that are owned by delinquent homeowners. The holder of the liens of the home has required the assistance of the court to repossess the home in order to terminate the borrower’s right to redeem. An REO is a home or property repossessed by the bank or a lender after an unsuccessful auction. These properties could be free from liens upon successful negotiations with the bank and other lien holders.

3. Foreclosed home sale is done through bidding in auction. The officer of the court or the sheriff initiates the process of bidding. The price initially starts to an amount equal to the borrower’s outstanding loan but does not exceed the property’s market value. Real estate owned properties are directly sold by the bank. They are expensive compared to a foreclosure since lenders are willing to take all opportunity for them to regain their losses.

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It’s really a matter of fact that you are in danger. But you should know that why you are in danger. Foreclosure is one of the dangers faced in the field of real estate. Foreclosure deals with the loan recovery. This is done by the lender and is the most extreme situation. When all the ideas and tricks fail then they go for this kind of loan recovery. I do feel that now you must have gotten an idea about foreclosure. But there is lot for you in this article.

Suppose you feel that your house value has gone down and it will not even allow you to pay for the loan amount which you have taken, then you should prepare yourself for foreclosure. But do you feel that it is right thing to do. This is certainly not the right thing to do. You might be in trouble but you can save yourself from it. However, this is another twist in the tail.

Foreclosure can generally be of three types. Let us discuss all of them one by one. However I would like to wrap it up quickly as there are some other facts which are more important. However the first type of foreclosure is the pre foreclosure. This is the type in which the lender has not yet come to know that you, the home owner, is going to sell the property. Some investor might contact you when he gets the information about your status from the county clerk’s office or some credit card office. Anyway, the investor has contacted you and this is more important. You have to make sure that you grab this opportunity with both hands. Just satisfy the investor to the maximum money possible before it is brought to the notice of the lender. In this way you will suffer minimum loss.

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When banks reject your short sale offer, do you just easily walk away? What should you be doing?

Bank Rejection is Possible

Even if you think everything is finally set, banks may still find reasons to reject your offers. They do this because they want to keep their loss at a minimum. People engaging in short sale would want to sell their houses less than their outstanding loan in exchange for the forgiveness of debt. If the bank accepts, this would normally result to a loss in the part of the bank. That is why they are being meticulous on whom to grant this opportunity.

If you are interested to know why they reject it, here are some of the reasons:

1. Your offer price is lower than the calculated BPO.
2. Your hardship letter is not convincing enough or it could be your reason for undergoing short sale is not acceptable.
3. Your short sale package is incomplete or some of the requirements got lost.
4. It could be your loan was already sold to a third-party investor and they may have rejected your offer.
5. On the other hand, it could be because the property sold has a mortgage insurance that lenders would find it advantageous in their part to foreclose the property and collect money for no loss.

You can make a Counteroffer

In certain situations, you can have more reasons to just not give up trying. Depending on the reason for rejections you can always make a counteroffer to sweeten your proposal. This way lenders would be able to see the benefits of short sale on their part. However, take note that this would mean more additional days or weeks for waiting. So, if you do this be sure you do your best because sweetening the offer does not stop foreclosure from happening.

When you pursue this, the first step to making a counteroffer is knowing the exact reasons why your bank rejected the offer. This will allow you to evaluate if you have to fight or fly from the situation. At the same time, this also saves you time on deciding which area of your offer that needs to be changed.

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Find out the most basic facts about loan restructuring to avoid foreclosures through Obama’s Federal Loan Modification Program. Includes what the program stands for, its benefits, and application processing details.

1. What is Obama’s Federal Loan Modification Program?

Instigated by the current administration, Obama’s Loan Modification Program was conceived to lend a hand to homeowners having difficulty in paying their mortgage payments. The program was devised for those affected by the recent economic recession in the country. Americans suddenly find themselves with high interest loans and unable to get refinancing from their lenders. To prevent millions of Americans from losing their homes, the program provides $75 billion worth of financial support.

2. What are the benefits of Obama’s Federal Loan?

The federal loan will be beneficial to parties affected by the restructuring, namely homeowners and their financial institutions. It proposes to help homeowners lower their mortgage payments to make them reasonable and maintainable. Homeowners would only need to pay an amount not exceeding 38% of their gross monthly income. These figures will include the insurance, the taxes and the appropriate association fees.

Homeowners who are eligible for the restructuring of their loans will also be allocated bonuses. And to aid financial institutions, the Treasury Department is offering monetary compensation for every adjusted loan as an encouragement for them to participate in the modification program. Also, the United States government will be shouldering the cost for whatever lost income is incurred by financial institutions due to the lower rates. So even if annual payments of $1000 are made by homeowners for 5 years, the amount will still be attributed to the loan principle to help reinstate equity.

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