Save My Home

These days, record-breaking foreclosure numbers seem to be coming out with more and more frequency. But what happens to the thousands of families after their personal financial disaster?

Unfortunately, once a foreclosure is final, the financial and emotional upheaval is far from over.
While there's considerable pain, most foreclosure victims will eventually become homeowners again. Still, that won't happen any time soon, especially since mortgage rule maker Fannie Mae has recently lengthened the time that must lapse between a foreclosure and approval for a new mortgage.

Here's a look at the issues foreclosed families grapple with and some smart solutions.

1. Finding a new home
The immediate problem is obvious: where and how to find a new place to live.
Lack of cash for a rental deposit is probably the biggest barrier to foreclosed owners getting re-established on their own. Landlords will sometimes accept tenants who have a lower credit score, but if landlords look beyond a numerical score, a foreclosure may spook them, since it indicates the potential tenant hasn't paid his housing bills. If the foreclosure can be explained, however, and if the rental candidate has a solid job history, he or she may be accepted.
Scraping together a rental deposit isn't easy for cash-strapped foreclosed owners, and often landlords may ask for a higher deposit.

It is recommended that people try to make plans as soon as they think foreclosure is inevitable. Anyone who has an FHA-insured loan who's being foreclosed on should investigate the "cash for keys" program, whereby they get a check for up to $1,000 if they voluntarily vacate their home and leave it "broom clean".

2. Suffering through the credit fallout
Once owners default on their mortgages, other creditors consider it much more likely they won't collect what they're owed either. Credit cards have a 'default' rate, and (foreclosed owners) could see their interest rate jump to very high levels — as much as 30 percent. You may also have a hard time getting a decent car loan.

If a foreclosure is an isolated event on an otherwise good credit record, consumers may be able to rehabilitate their records and garner better loans and card rates in 24 months.
But since a foreclosure is rarely the former owner's only credit slip-up and foreclosures are often combined with the fallout of punishing rates, some former homeowners will take a long time to climb back up to a good credit score.

3. Buying another home of one's own
Fannie Mae has just increased the length of time it takes from the completion of a foreclosure sale until the borrower can get a new mortgage from four years to five years. The extra year is designed to deter what Fannie Mae believes are borrowers who have made reckless debt decisions. But foreclosed owners who can explain that extenuating circumstances — typically situations beyond someone's control, such as a job loss — are the impetus for the foreclosure must wait only three years.

Perhaps the best option for obtaining a mortgage after foreclosure is with a federally insured FHA loan. The minimum time between the completion of foreclosure until when you can be approved for an FHA loan is three years — whether or not there are extenuating circumstances. Still, FHA borrowers will have to show that they've been practicing good bill-paying habits since the foreclosure.

4. Owing a potential employer an explanation
Should you lose your job as well as your home, your new job hunt shouldn't be hindered by the subject of your foreclosure coming up in job interviews — unless you're applying for a job in which you handle money. The federal Fair Credit Reporting Act has rules employers must follow, such as notifying the applicant of the credit check, and most companies limit checks so as not to reach past the law.

If a foreclosed owner is applying for a financial job, he should have an explanation ready, perhaps describing how the foreclosure has changed some of his personal money-management skills today.

5. Getting hit with a tax bill
It seems like the ultimate injustice: You lose your home and then weeks or months later you open the mail and find a bill for taxes on the amount of mortgage that the lender was never able to recover from the sale of the property. Any time debt is forgiven, it's a potentially taxable event. You are not paying back money that you borrowed, so that money is considered income by the IRS.

However, there are some exceptions. Last year, Congress passed relief for foreclosed owners — but only those who lost their principal residence and didn't have a mortgage that they had previously taken as a cash-out refinance to use the proceeds for expenses other than improving their home. But foreclosure victims may still not have to pay a tax tab, even if they had a cash-out refinance. That's because the IRS has long allowed taxpayers to escape a bill on forgiven debt if they are insolvent. If, for instance, you receive a Form 1099c from a lender saying it couldn't recover $5,000 of what it was owed, but your debts exceed your assets to the tune of $15,000, you must file Form 982 with your tax return to clear your tax obligation.

6. Living through loss
The emotional toll of leaving a home and neighborhood are impossible to quantify. One glimmer of hope is that the large numbers of foreclosures today may lessen the stigma of the event. With foreclosures so much in the news, it may prompt people not to make judgments.

Posted under by fannie mae, fha loan, foreclosure, home loans, second mortgage, taxes | 3 COMMENTS

Saving money and being more frugal is neither a science nor an art; rather it is somewhere in between and requires your commitment and hard work. Saving money takes time to develop and brings benefits that will endure for the rest of your life. Begin to save money today. Saving money is within your control and can bring you huge benefits. Remember every little bit counts. Some of the tips below will work for you and some will not, but you will be surprised at the impact that little changes can make when it comes to saving.



Save Money Tip 1
Spend Less. This is not over simplifying but is essential if you are serious about being a long term money saver and being able to save money every day. Review what you spend and look at ways you can save money. Do you really need to have newspapers and magazines delivered? Can you do without those coffees you buy at break time everyday? What about using the public lending library instead of buying books or music CDs? Once you start looking for little ways to save money and spend less you will quickly become an expert and really save money.

Save Money Tip 2
Establish a personal budget. This is essential for families and individuals and can be the fastest way to save money. You will instantly see your incomings and outgoings once you create your budget. You will not be able to save money unless you know how much money you have coming in, and how much money you have going out. Once you have prepared a budget of incoming money and outgoing money, you WILL be able to identify areas where you can save. It is MUCH more difficult to save money over a long period of time (the rest of your life?) without a budget.

Save Money Tip 3
Bulk is good. Think about shopping and buying in bulk. Save money grocery shopping by planning meals in advance and bulk-buying. You can also save money by cooking in bulk. This is a real way you can save money with little preparation and almost no extra outlay. Always purchase generics when you can. Prepared foods and convenience foods will always be much more expensive than the generic ingredients needed to make the food. Preparing food in bulk and in advance also gives you the opportunity to plan ahead and be more accurate in your budget. Save Money by buying in bulk whenever you can. One thing to be aware of when buying in bulk is to be sure that any product you buy will get used before it goes bad - you won't save money if you have to throw stuff away.

Save Money Tip 4
Make sure a sale is a sale. By this I mean do your price research before you commit to making an expensive purchase in a retailers money-off sale. You have to be sure the sale really is a sale and not a creative marketing strategy of the store to encourage you to spend your money without thinking. Once you have researched the true price of a product (any product) you are in a good position to take advantage of a sale, special offer or discount and really save money. "Buy one get one free", "50% off", and "Huge Discount" will only help you save money if the actual price you pay is lower than you would pay somewhere else for exactly the same product.

Save Money Tip 5
Buy used. Sure, we all like to buy new. But there are huge money savings to be made in buying used. Typically cars lose one-third of their value in the first 24 months from new. Why not buy a car 24 months old? Other items such as clothes can be worth even less just the day after new. Look for ways to buy "as good as new" items and save money. Typical products you might consider buying used to save money include: cars, clothes, electrical goods, garden items... tools and sheds, household items... pots and pans, the list of used goods where you can save money is endless. Think E-Bay and Craig's List.

Save Money Tip 6
Don't carry excessive debt. Some debt in our lives may be essential. We may need a mortgage to purchase a home, we may need to use our credit card to make purchases until pay-day, but your aim to save money should be to have as little debt as possible. Credit Card debt is typically the most expensive debt we may carry. You will be able to save money every month if you make it an absolute rule to pay off your outstanding balance every month. If you can have the discipline to do this you will save money by effectively having no debt, and thus no interest charge on your credit card(s).

Save Money Tip 7
Save Money. No, I mean really save some money. Each week or each month get into the habit of putting an amount, however small into your savings. You could start by saving a very small fixed amount each time and then move to putting in larger amounts once you begin to save money from your other money saving strategies. You will find that by saving money on a regular basis you will quickly build up a store of reserve money and also feel motivated to save more. The hardest part is to take the first step and start saving money - so START TODAY and save some money NOW! If you find it impossible to save money once you have it, consider having money deducted from your paycheck direct each month. This can be a great way to save money rapidly as once it is set up you will not notice it is being collected and your savings will grow with no more effort from you.

Save Money Tip 8
Eat in rather than out. This is a huge area where you can save money. A cup of coffee taken out could easily cost you TWENTY times (or more) what it would cost you to make it at home. So think before you drink when you are out. Eating is the same. Fast food restaurants are counting on you eating food that you perhaps don't really need at that time but buy just because it is quick. Why not wait until you get home and have a more nutritious meal and save money at the same time.

Save Money Tip 9
Use less. This money saving tip is a lesson we all need to learn. We live in a consumer society where waste is a huge problem. If we could all use and consume less there would be less waste, less power consumption, and the benefits for you are SAVING MONEY. Consider using less shampoo when you wash your hair, this may not mean washing your hair less effectively it means not flushing the excess shampoo and your money down the drain. What about saving on heating? Turn the thermostat down or put on extra clothes when you are cold. Turn off lights, the TV and the computer when they are not in use. Each little saving you make will build up and enable you to save money.

Posted under by foreclosure, home savings, save money, saving | NO COMMENTS

There are many popular options a lender will offer to a home owner (borrower) in default.

Forbearance
Forbearance is an agreement between the lender and the home owner that reinstates the delinquent loan through the payment of a lump sum or a schedule of payments over a period of time. If a borrower is behind in his or her payment by $2,000, for example, the lender may allow the borrower to pay the money back through installment payments over six months. The lender may decide, on the other hand, to allow the borrower to pay a reduced monthly payment until the borrower has an opportunity to get back on his or her feet and pay any remaining arrearages in one lump sum. The forbearance may be an oral agreement or written contract between the lender and the borrower. Generally these agreements will not exceed more than 12 months.

Loan Modification
A loan modification is a change in any of the terms of the original note. This includes decreasing the interest rate, re-amortizing the remaining balance, extending the term of the loan, or other options at the lender's discretion to assist the borrower through a temporary set back.
Generally a lender will consider a loan modification when foreclosure is eminent and the borrower's income has been decreased but will be able to keep the loan current after the loan modification.

Mortgage Refinancing
Mortgage refinancing is an option where the lender would allow the borrower to refinance his or her existing mortgage, wrap in any late payments and fees, and cash out part of his or her equity in the home to allow the borrower to regain control of a debilitating financial situation.
Refinances are generally open to borrowers that face a temporary set back in their financial situation, have shown outstanding credit history in the past, and can prove that he or she can support the new mortgage payment.

Second Mortgage, Line of Credit
A lender may offer a second loan or junior lien to a borrower in order to make up any back payments, late fees and other charges necessary to reinstate the loan. The borrower, in return, will be required to make an additional mortgage payment to cover the principal and interest payments on the second loan. Interest rates often rival credit cards and should be looked at with caution.

A borrower may also be able to borrower money from his or her bank or against a 401K or pension to use to repay the deficiency and reinstate the loan. Conditions may apply.

Sale of the Home
Selling a home is an alternative for borrowers that are unable to reinstate the loan and face eminent foreclosure. This option allows a home owner to try to salvage his or her credit, pay off the loan, and retain any remaining equity in the home. By informing the lender of this option, the lender may delay the foreclosure proceedings in order to allow sufficient time to sell the home.

In certain cases, the lender may allow the borrower to sell the home when the proceeds from the sale are not sufficient to pay off the existing loan. This is known as a short sale. A borrower should check with his or her lender to discuss this option. Furthermore, the borrower may have to pay taxes on any loss the lender writes off from the short sale. A borrower should consult his or her tax professional before agreeing to a short sale.

Deed-in-Lieu of Foreclosure (DIL)
A deed-in-lieu of foreclosure is a voluntary conveyance of title to the lender. Generally this is a last ditch effort by the borrower to avoid the negative consequences of foreclosure. In return for the voluntary conveyance to the lender, the borrower is often released of any personal responsibility for the mortgage.

In order to qualify for a DIL, most lenders state that there must not be a second mortgage or junior liens on the property. Properties with values in excess of the amount owed against the home (to include normal closing costs) should consider selling the property before voluntarily conveying the home to the lender.

With so many options, take action now and figure out the best strategy for your situation. Visit www.savemyhome2010.com and click on any of the Partner icons to speak with an expert.

Posted under by forebearance, foreclosure, loan modification, refinancing, second mortgage, short sale | 1 COMMENT

Timelines vary from state to state.

First month missed payment - This will be the first point when your lender will contact you by letter or phone. Lenders are extremely back logged, so if you do not hear from your lender, don't assume everything is fine.

Second month missed payment - Your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take your lender's calls. Talk to your lender and explain your situation along with what you are trying to do to resolve the situation. At this time you still may be able to make one month's payment so that you do not fall three months behind.

Third month missed payment - You will receive a letter from you lender stating the amount that you are delinquent, and that you have 30 days to get current. This is called a "Demand Letter" or Note to Accelerate". If you do not pay the specified amount or make some kind of arrangements by the given date, your lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made. You still have time to work something out with your lender.

Fourth month missed payment - Now you are nearing the end of time allowed in your Demand Letter or Note to Accelerate. When the 30 days ends, if you have not paid the full amount or made arrangements, you will be referred to your lender's attorneys. You will incur all attorney's fees as part of your delinquency.

Sheriff or Public Trustee Sale - The attorney will schedule a sale. This is the actual day of the foreclosure. You may be notified of the date by mail or a notice is taped to your door. The time between the Demand Letter and the actual sale will vary from state to state. You have until the date of the sale to pay in full or make arrangements with your lender.

Important - Stay in contact with your lender, and get assistance as soon as possible. The lender does not want your house. They are not in the real estate business... they are in the banking business. They will do what they can to help, but they have to be kept in the loop.

Posted under by demand letter, foreclosure, home loans, lender, missed payments | 1 COMMENT