Home Foreclosure Horror Story: Going on Vacation? Make Sure Your Home Isn’t Accidentally Foreclosed On & Cleaned Out While You’re Gone Like This Man

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

An 82-year-old Florida man got the shock of his life when he returned from vacation. Not only was his home cleaned out, it was padlocked and foreclosed on while he was away.

And get this – it all happened by accident.

And, who’s the lender behind this mess? Bank of America. Read this tale of what I call the “Vacation Home Foreclosure Horror Story”  as detailed in the HuffingtonPost.com article, Retired Floridian Returns Home To Find His Home Foreclosed Upon, By Mistake.

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Bank of America Home Foreclosure Missteps Mount

Bank of America seems to really have no procedures in place to deal with foreclosures, if recent missteps are any indication.

They tried to foreclose on a couple who paid cash for their home in 2005. The couple had to sue them to get back monies they paid in legal fees to correct this “non-foreclosure.”

They were fined $20 million for illegally foreclosing on military homeowners

They are one of the banks being penalized for failing to meet rules set by the Home Affordable Modification Program (HAMP)

And now erroneously foreclosing on vacationing homeowners.

What’s next?!

How to Protect Your Home from Foreclosure While You’re On Vacation

I can’t even believe I had to write a headline like this, but with the way banks have been misbehaving lately when it comes to home foreclosure, it pays to be careful.

 Have someone watch your home while you’re away. Have them get the mail, pick up wayward newspapers – and by all means alert you if they see a foreclosure cleaning crew pulling up to “trash out” your property.

Related Posts

Foreclosure Advice: Should You Continue to Pay Your Mortgage While You Wait for a Home Loan Modification?

Foreclosure Crisis Deepens Yet Again: The One Thing Lenders Won’t Do That Could Significantly Decrease Foreclosures Immediately

Foreclosure Homes for Sale: Banks Prolonging the Crisis?

Stopping Foreclosure: Obama Administration to Launch 2 New Programs to Help Homeowners Avoid Foreclosure (One is for Unemployed Homeowners)

Home Loan Modification: 65-75% of Loans Modified via HAMP (the Govt’s Home Affordable Modification Program) Likely to Go Bad

Home Loan Modifications: Why Federal Government’s Mortgage Modification Program a Mix of Good and Bad News for Homeowners

Prevent Foreclosure Advice: Obama to Stop Banks from Foreclosing on Homeowners?

Some Banks are Purposely NOT Foreclosing on Homeowners in Default: Here’s Why

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the

Government Foreclosure Help: Get $50,000 to Get Caught Up on Your Mortgage – Really! See If You Qualify

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

Yet another government “prevent foreclosure” program has come down the pike. It’s projected to help some 30,000 homeowners, and for many, this bridge loan could turn into a $50,000 gift.

Help Stopping Foreclosure: How Government’s New Interest-Free Loan Program Could Turn Into a $50,000 Cash Gift 

According to the MSN.com article, $1 billion in new help to flailing homeowners, the program offers:

. . .  approved homeowners  . . . one-time help to become current on overdue mortgage costs and make monthly (first lien) mortgage payments (including principal, interest, taxes, and insurance) for a maximum of two years or $50,000. No payments on the loan are due for five years if the borrower stays current on mortgage payments and meets other requirements. After that, the loan balance is reduced by 20% a year until nothing is owed.

Following are some more particulars of the program, as well as some pros and cons.

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Government Foreclosure Help: What Is the New Program?

The acronym is EHLP (couldn’t they have found a way to make it “HELP” instead?), which stands for the HUD Emergency Homeowners’ Loan Program. As described on HUD’s website, the program:

. . . is designed to provide mortgage payment relief to eligible homeowners experiencing a drop in income of at least 15% directly resulting from involuntary unemployment or underemployment due to adverse economic conditions and/or a medical emergency.

To Stop Foreclosure: Pros of This Program

(i) It Exists: Not to be too facetious, but the more programs out there to help homeowners stop foreclosure, the better;

(ii) Time to Get Back on Feet: Homeowners must demonstrate that they will be able to resume paying of their first mortgage at some time in the future. The program sets this at two years, which is more than generous when you consider that many banks only gave out six month to one-year home loan modifications.

And, this is probably why so many homeowners who received these limited-term modifications  found themselves defaulting in high numbers a year or so later.

(iii) Some “in the Middle” Can Qualify: This program is for homeowners who have a household income that doesn’t exceed 75,000, for a family of four. While this is not a lot of money, it’s significantly above what is officially considered low-income, and high enough to include many families that otherwise are in the middle who usually don’t qualify for anything.

This is actually refreshing.

Now for the Cons

(i) Limited to Certain States: Not available in all states; although, there’s a good reason for this.

The states that don’t qualify for this program have the Hardest Hit Fund, another government prevent foreclosure program that helps homeowners who live in states that have been “hardest hit” by the foreclosure crisis and the economic downturn.

(ii) Stringent Guidelines: If  you answer no to any of the qualification guidelines, it can disqualify you.

Although the need for broad guidelines is understandable (eg, you’re at least more than 90 days late on your mortgage), life is just so cut and dried. Who qualifies should be considered more on a case-by-case basis.

(iii) Leaves Small Biz Owners in the Cold: Many prevent foreclosure programs seem to leave out self-employed individuals altogether, or in limbo. For example, this program, is for those who’ve had a “significant reduction in income because of involuntary unemployment, involuntary underemployment, and/or a medical emergency?”

What if you owned a small business and you lost a lot of clients because of the economy. You’re still in business, so you’re not “unemployed.” You don’t have a medical emergency, and you own the business so there’s no “involuntary” underemployment.

(ii) Quick Deadline: The deadline to apply is July 22nd – as in THIS July 22nd. Program seems to have been launched with little fanfare.

Related Posts

Stopping Foreclosure: Obama Administration to Launch 2 New Programs to Help Homeowners Avoid Foreclosure (One is for Unemployed Homeowners)

Home Loan Help: Documents Needed to Apply for a Mortgage Modification with HSBC (and Other Lenders)

Florida Housing Assistance: Get 6 Months of Your Mortgage Paid Free — How? Via the State’s “Hardest-Hit” Fund

HAMP Program Changes: If You’re Unemployed and/or Underwater On Your Home, Get Gov’t Help to Refinance or Modify Your Mortgage

Free HUD Housing Counseling Program: The $88 Million Cut that Hurts Homeowners Trying to Prevent Foreclosure

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Visit this link to see which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.
 
 P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Big Banks Gone Wild! Bank of America and Other Large Banks In the Hot Seat Again Over Foreclosure Misdeeds

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

Home Foreclosure News Wrapup of the Week: Legislators around the country are putting teeth into their fight with mortgage servicers over foreclosures, as the following two stories in the world of home foreclosures highlight this week.

Bank of America (and Other Large Banks) In the Hot Seat Again Over Foreclosure Misdeeds

This time, it’s over foreclosure taxes – as in, they didn’t pay them. As we discussed in this post on banks being taken to the whipping post over foreclosures, Bank of America in particular can’t seem to do anything right. And, they’re not the only ones. 

A Michigan county official is suing them for possible millions due in transfer taxes on sales of foreclosures. According to the San Francisco Gate article, Bank of America Sued for Foreclosure-Sale Taxes in Michigan:

Bank of America Corp., Wells Fargo & Co. and mortgage servicers were sued by a Michigan county official who claimed they failed to pay millions of dollars in transfer taxes on foreclosure sales. . . . The county claims that the banks would transfer ownership of a note to Fannie Mae or Freddie Mac to avoid transfer taxes in foreclosures. 

And, the trouble doesn’t end there for the banking giants.

States to Sue Banks if Foreclosure Talks Collapse 

At least two state Attorney Generals, according to Banks Will Be Sued If Foreclosure Talks Collapse, Two States Say, are prepared to sue large banks including Bank of America, JPMorgan Chase and others, if a settlement over their foreclosure practices aren’t reached.

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Legislators and state lawmakers around the country want their pound of flesh from mortgage servicers like these banking giants – and they’re putting their legal weight of their respective offices behind it. The aforementioned article states lawmakers and others saying:

If we don’t get an agreement, we’re prepared to go to court . . . We don’t want a settlement around the margins, around the edges . . . [it] has to be fundamental . . . to make some changes that are worth it, that are constructive.

What Does All of This Mean for the Average Joe Homeowner?

In short, that lawmakers are getting serious about penalizing banks. And, while this may not do a whole lot for many homeowners who’ve lost their homes to foreclosure and/or are about to, it does bode well for future homeowners.

One of the biggest purchasers most Americans ever make is a home. But strangely, it’s one of the least regulated  industries. In the vast majority of states, there is no training required to be a loan officer/mortgage consultant. And we’ve all learned just how much of a lack of regulation there was [is] on lending institutions (ie, banks).

This lack of regulation contributed to the home foreclosure crisis. It could be argued that it’s one of the chief reasons many of these home loans got pushed through and why so many Americans find themselves facing foreclosure (and their own carelessness in buying homes they couldn’t afford).

Related Posts

How the Foreclosure Crisis Started: Investors, Speculators, Mortgage Fraud & Lax Lending Standards All to Blame

Home Foreclosures:  How Homeowners Contributed to the Foreclosure Crisis

Foreclosure Clean Up: Why It’s Still a Leading Small Business Opportunity for 2011

Want a Mortgage? Why It’s Tougher to Qualify Now & Why That’s a Good Thing

Prevent Foreclosure Help: Another Big Bank Not Playing by the Rules — If Your Mortgage is With Chase, You’re Screwed

Stopping Foreclosure: Big Bank That Received $25 Billion in Bailout Money Against Mortgage Modification Help for Homeowners

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Home Foreclosure News: Why Home Prices May Be Depressed for Some Years to Come & What It Means for the Average Homeowner

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

Shadow Inventory Shrinking: More homes that were/are in foreclosure are being sold, which is reducing the amount of shadow inventory on the market. Although there’s been a spate of good news on the foreclosure crisis front in recent weeks, there’s still cause for alarm.

Why? Because according to the Bloomberg article, Foreclosed Inventory Shrinks as Homes Sell, which discusses the decrease in shadow inventory on the market, statistics show that:

As of May [of this year], as many as 11.1 million of the 55.1 million homes with mortgages were in jeopardy of default over the next five years and potential contributors to the shadow inventory . . . At current sell-through rates, it would actually take us almost 12 years to work through that inventory . . .  

While experts don’t think it will take this long to sell off these distressed properties, it just highlights that we’re nowhere near at the end of the foreclosure crisis.

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What Shadow Inventory Means for the Average American Homeowner

To put it simply, continued depression of home prices. It’s simple supply and demand. When there are a glut of foreclosed properties on the market at cheap prices, buyers are not going to pay you “retail” (ie, a higher price – even if your home is “worth” it) for your home if you’re trying to sell. 

And, this is why shadow inventory must be greatly reduced before home prices in many areas can start to recover.

Related Posts

The Real Estate Market and House Values: Foreclosures Continue to Drag Down Home Prices – Options It Leaves for the Average Homeowner  

Foreclosure Crisis to Drag on for Another 9 Years?

Foreclosed Properties Continue to Drag Down Construction of New Homes: What It Means for the Average Joe

Home Foreclosure News: 9 Million Homeowners Could Go Into Foreclosure Between 2009 & 2012

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Foreclosure Statistics: 4 Reasons Home Foreclosures are Suddenly Declining

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

Finally, there’s some good news on the home foreclosure front. The crisis seems to be abating. According to the article, Home foreclosures and foreclosure sales declining, on phillyBurbs.com:

RealtyTrac, an online marketplace for foreclosure properties, recently released its U.S. Foreclosure Market Report for May 2011. It shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 214,927 U.S. properties in May. That’s a 2 percent decrease from April and a 33 percent decrease from May 2010.

Foreclosure Statistics: A Look Behind the Numbers

A number of reasons can be attributed to the decrease. Namely:

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I. Legislative Intervention: A slew of bills have been proposed by lawmakers since this whole foreclosure crisis started. Most of it has gone unpassed, but some has slipped through. Following are some posts here that speak to these changes.

Home Foreclosure News of the Day: New Requirements Imposed on Mortgage Services to Help More Homeowners Prevent Foreclosure?

Florida Foreclosures: Good News for Homeowners — Court Requires Mediation before Foreclosure

Home Foreclosure Scams: Attorney General Cracks Down on Firms Preying on Desperate Homeowners Facing Foreclosure

Florida Housing Assistance: Get 6 Months of Your Mortgage Paid Free — How? Via the State’s “Hardest-Hit” Fund

II. Government “Prevent Foreclosure” & Other Programs: After Obama took office, one of the first things the administration did was push through a program to help homeowners stop foreclosure. Hence, HAMP was born.

What is HAMP?

As discussed HAMP in the post, HAMP Program Changes: If You’re Unemployed and/or Underwater On Your Home, Get Gov’t Help to Refinance or Modify Your Mortgage it’s:

HAMPis the Home Affordable Modification Program: It is designed to help homeowners meet eligibility requirements to avoid foreclosure by modifying their existing home loans to a more affordable level. Your home does not have to be an FHA loan, like in HARP (discussed below).

Following are the details of some other federal, state and local programs that have helped to stem the tide of foreclosures.

Stopping Foreclosure: Obama Administration to Launch 2 New Programs to Help Homeowners Avoid Foreclosure (One is for Unemployed Homeowners)

Foreclosure Cleanup Money: HUD Ponies Up Another $1 Billion to Help Clean Up, Clear Out and Rehab Foreclosed Properties

Florida Housing Assistance: Get 6 Months of Your Mortgage Paid Free — How? Via the State’s “Hardest-Hit” Fund

Free HUD Housing Counseling Program: The $88 Million Cut that Hurts Homeowners Trying to Prevent Foreclosure

III. The Economy: The final reason foreclosure statistics show that foreclosures are declining is that it’s the natural order of things. What goes up must eventually come down – and vice versa. While it’s been a slow, what many experts deem “jobless” recovery, the economy is recovering. This means more people going back to work.

Bureau of Labor Statistics unemployment numbers bear this out, reporting:

In May [2011] . . . forty-three states and the District of Columbia posted unemployment rate decreases from a year earlier, four states reported increases, and three states had no change. The national jobless rate was essentially unchanged at 9.1 percent, but was 0.5 percentage point lower than a year earlier.

IV. Change in American Attitudes about Money/Debt/Finances: Americans have been suffering through this home foreclosure crisis since the fall of 2007. And quite frankly, many have learned some harsh lessons when it comes to money.

Proof?

According to the May 15, 2011 article, Americans shed mortgage debt at record pace, USA Today:

Americans are reducing mortgage payments at a record clip, directing cash that once went for debt into consumer spending and savings. . . . The nation has slashed total mortgage debt from nearly $11 trillion at the mid-2008 peak to $10.3 trillion in the first three months of 2011 . . . For the first time since 1998, households are saving more than they’re spending on mortgage interest.

In short, many Americans are getting serious about getting out of mortgage (and other) debt. We’ve learned what our grandparents knew – cash is king!

While we still have quite a ways to go before the home foreclosure crisis is over, we now seem to be headed in the right direction.

Related Posts

Home Foreclosure News of the Day: New Requirements Imposed on Mortgage Services to Help More Homeowners Prevent Foreclosure?

Home Loan, Bad Credit and How to Qualify: Yes, It’s Still Possible, But . . .

Home Foreclosure News of the Day: 3 Big Banks Penalized for Not Meeting Government Foreclosure Prevention Program (HAMP) Standards

$30 Billion Government “Prevent Foreclosure” Program Scrapped

Foreclosure Crisis to Drag on for Another 9 Years? 

Home Foreclosure News: 9 Million Homeowners Could Go Into Foreclosure Between 2009 & 2012

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

When to Refinance a Home Loan: With Mortgage Rates Still Below 5% (Thanks to Foreclosure Crisis), Now May Be One of the Best Times

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

According to an article on the Kansas City Star website, mortgage rates are still below 5%.  The article states:

Fixed mortgage rates stayed roughly flat after falling for eight weeks. The average rate on the 30-year loan ticked up from a yearly low of 4.49 percent to 4.50 percent, Freddie Mac said Thursday. The average rate on the 15-year fixed mortgage fell to 3.67 percent from 3.68 percent. That’s a low for the year. . . . The average on a one-year adjustable rose to 2.97 percent from 2.95 percent, which was the lowest on records going back to 1986 (emphasis added).

In light of the foreclosure crisis, it can be easy to forget that these are rock-bottom rates that haven’t been seen for years. At the height of the real estate marketing a few years ago, I good rate was 6-8% — even for those with decent/good credit. So anything below 5% is amazing.

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What Do Low Mortgage Rates Mean for the Average Joe Homeowner in a Foreclosure-Plagued Market?

In short, opportunity . . . opportunity to refinance a home mortgage. If it’s something you’ve been wanting to do, now’s a good time to look into it. 

Advice on When to Refinance a Home Loan and When Not To

Be careful not to refinance just to refinace though. Run the numbers to see if — with all of the costs associated with refinancing — that it makes sense for you to do so. Followin gis some sage advice from a Bankrate.com article entitled, A standard rule is, if you can’t When NOT to Refinance [Your Home Mortgage]. The article states:

Refinancing might be a bad deal for a homeowner who has been paying the same mortgage for many years. If you have been paying for 20 years on a 30-year mortgage, refinancing for another 30 years might result in a lower monthly payment. But you would be making those payments for 30 more years instead of 10. . . . The bottom line is that you have to look at the bottom line: figure out the costs of refinancing and compare those with your existing payment and calculate how long it would take to recoup the costs. If you don’t plan to stay in the house to make it worthwhile, stick with your existing mortgage.

One of the great things to come out of the home foreclosure crisis is that lenders are “protecting” homeowners by turning down many homeowners who may want to refinance. The word “protecting” is in quotation marks because they’re no really look out for the homeowner’s benefit as much as they’ve tightened lending standards.

They’ve gone from one extreme (giving home loans to anyone with a puls), to the other (turning down even well-qualified homeowners).

If they’d practiced this diligence before the home foreclosure crisis started, maybe the housing market wouldn’t be in this mess — or at the very least, not in so deep.

Read more on why it’s so difficult to get a home loan now.

But, I digress.

Bottom line — know what your future financial goals are — immediate and long-term.

Here’s a refinance home loan calculator  to get you started.

Also consider how long you plan to stay in the home. Then, do some comparative shopping for home loans and refinancing options. For the right homeowners, there are some great deals to be had. And ironically enough, they were brought about because of the home foreclosure crisis.

Related Posts

Because of Home Foreclosures, Buying a Home Is Cheaper than Renting in Almost 75% of Largest American Cities

Home Foreclosure News: Owning a Home Becoming a Lot Harder for Lots of Americans Because of the Foreclosure Crisis

Foreclosure & Credit: How Does Foreclosure Impact Your Credit Report?

Home Loan Help: Documents Needed to Apply for a Mortgage Modification with HSBC (and Other Lenders)

First-Time Home Buying Advice: Is It Better to Buy a New Home than a Foreclosed Home?

Foreclosure Advice & Credit Card Debt: Can Credit Card Companies Put a Lien On Your Home?

Short Sale vs. Foreclosure: What’s the Difference between Them and Which One Hurts My Credit (FICO) Score More?

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

As the home foreclosure crisis rages on, more and more homeowners are considering options that they never thought they’d have to consider. And, with deadlines pending that can greatly impact future finanical decisions, it’s imperative that the right decisions are made at this critical time.

Here, we’re going to discuss the differences between a foreclosure and a short sale, and the credit impact of each. But first, let’s clearly define what they are.

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What Is a Foreclosure?

A foreclosure occurs when the lender takes ownership of a property away from the owner. In legalese, it is “the termination of all of the rights that a mortgagee (the homeowner) has in a property.”

This usually occurs because the owner has defaulted on mortgage payments. But, it can also be due to property taxes being owned, HOA fees not being paid, a contractor’s lien, etc.

What are the Stages of the Home Foreclosure Process?

The foreclosure process is usually initiated when a lender notifies the mortgagee that payment is delinquent. This is done via a Notice of Default (NOD). Learn more about all of the stages of the home foreclosure process.

What is a Short Sale?

A short sale is when a lender agrees to accept less for the property than what is owed on it. In essence, a buyer purchases the property directly from the lender at a discount.

For example, let’s say you’re facing foreclosure and you owe $100,000 on your home. But, because the foreclosure crisis has hurt property values, your home is only appraised at $73,000 and you have a buyer who is willing to pay that.

If the bank (lender) agrees to accept this as “full” payment, then you sell the home for $73,000; $27,000 “short” of what is actually owed on the mortgage.

Tax Implications of a Short Sale: You Could Wind Up Owing a Lot of Money in Taxes If You Short Sale Your Home after December 2012

Most times, you as the owner would be responsible for the “short” fall – as in, the government looks at it as “income” and you have to pay taxes on that. Yep, that’s right, you could wind up owing taxes when you do a short sale.

But, current legislation in place protects you from this penalty – if you act by a certain date. Following is more on this.

Why is this? We explained it in post we did earlier this spring about options for homeowners who are facing foreclosure, writing:

Home Foreclosure and Taxes: Important Tax Consequences of a Short Sale after December 31, 2012

For example, if you owe $200,000 on your home and you sell it for $100,000, the government will tax you on the $100,000 difference because it’s seen as a financial “windfall.” So if you’re going to do a short sale, be sure to do it BEFORE December 31, 2012.

Remember, in this market, it’s taking homes months and months — some more than a year — to sell. So if this is an option you’re considering, don’t delay too long. FYI, the tax break applies only to primary residences.

Learn more about The Mortgage Forgiveness Relief Debt Act and Debt Cancellation law — and the tax implications of a short sale.

Why Lenders Accept Short Sales

There are several reasons, ie:

Banks Are Not in the Real Estate Business: Banks are not realtors – and they don’t want to be. They want to make money from lending money – not buying and selling property. Hence, they don’t like to hold on to “housing inventory.”

So, they tend to sell it as quickly and expeditiously as possible. FYI, this is also why banks are willing to work with homeowners to stop foreclosure where possible.

Foreclosing Is Expensive: In many cases, it costs lenders more to foreclosure on a home than to work with a homeowner to prevent foreclosure. How much more? Consider this (from the linked-to post just above):

A report by the Joint Economic Committee of Congress estimates that the average cost of a foreclosure, to the homeowner, lender, local government, and neighbors (whose homes decline in value), is $78,000. By contrast, preventing the foreclosure would cost $3,300 per home on average.

So even though a short sale may bring in less, lenders are willing to accept it because the sooner they can get rid of the “toxic asset,” the sooner they can move on.

Maintaining Foreclosed Property Is Expensive: When a home sits empty, the owner (in this case, the foreclosing lender) risks vandalism and squatting, not to mention the maintenance and upkeep that’s required (eg, cutting the grass, securing the locks, winterizing, etc.).

Incidentally, this is why many lenders pay homeowners to leave (ie, offer cash for keys), so they can do a short sale to get rid of the property.

Now that you know what a foreclosure and a short sale are, let’s look at the differences between them.

Differences between a Short Sale and a Foreclosure

Possession: A short sale happens while the homeowners still has possession. In a foreclosure, the lender takes possession.

Selling Agent/Selling Process: Foreclosures are not sold by realtors; they’re sold by the lenders (usually at auction the courthouse steps of the county in which the property is located. The property owner doesn’t participate in the process. During a short sale, the homeowner is still part of the selling process.

Tax Consequences: A lender can sue you for the difference owed if the foreclose and they don’t sell the property for what’s owed on it.

While this can happen when you short sale your home too, it’s less likely to happen because you can do a short sale with “no recourse.” This means you ask the lender not to come after you for the difference (ie, take no legal recourse against you for the balance owed). Of course, they’d have to agree to it and you (and they) would sign papers to that affect.

For the reasons stated above, many lenders will gladly agree to a short sale with no recourse.

Which Hurts My Credit More – A Short Sale or a Foreclosure?

Contrary to conventional wisdom, the impact of a foreclosure and a short sale on your credit score is basically the same. Proof?

A few years ago, Fair Isaac, the people who invented the current credit scoring system (the FICO score), published a table showing exactly what happens to your credit score when you do a short sale, have a foreclosure, and/or go through bankruptcy.

Following is the data.

How Much Your Credit Score Is Lowered When You Do a Short Sale or Go Through Foreclosure

Consumer A

Consumer B

Consumer C

Starting FICO score

~680

~720

~780

FICO score after these events:

30 days late on mortgage

600-620

630-650

670-690

90 days late on mortgage

600-620

610-630

650-670

Short sale / deed-in-lieu / settlement (no deficiency balance)

610-630

605-625

655-675

Short sale (with deficiency balance)

575-595

570-590

620-640

Foreclosure

575-595

570-590

620-640

Bankruptcy

530-550

525-545

540-560

The real difference between the two when it comes to credit is how quickly you can recover. Time It Takes Your Credit Score to Recover from a Short Sale and a Foreclosure (and Bankruptcy)

Consumer A

Consumer B

Consumer C

Starting FICO score

~680

~720

~780

FICO score after these events:

30 days late on mortgage

~9 months

~2.5 years

~3 years

90 days late on mortgage

~9 months

~3 years

~7 years

Short sale / deed-in-lieu / settlement (no deficiency balance)

~3 years

~7 years

~7 years

Short sale (with deficiency balance)

~3 years

~7 years

~7 years

Foreclosure

~3 years

~7 years

~7 years

Bankruptcy

~5 years

~7-10 years

~7-10 years

How Long Does It Take to Qualify for a Home Loan After a Short Sale?

According to 2008 Fannie Mae guidelines, you can qualify for an FHA home loan after a short sale anywhere from right away (ie, immediately), on up to 24 months.

Note: In order to qualify immediately for an FHA loan after doing a short sale, you must never have been late on your mortgage.

Learn more about how to qualify for a Fannie Mae home loan after a short sale, foreclosure, deed in lieu of foreclosure, etc. [link is to a pdf file]

How Long Does It Take to Qualify for a Home Loan After a Foreclosure?

You may have to wait anywhere from three to six years after a foreclosure to get a home loan. This is the main reason short sales are often preferred over having a foreclosure on your record.

Which One Is Better for My Credit Score: A Short Sale or a Foreclosure

This is a personal decision because it depends on what your long-range goals are. However, in most cases, if you have a choice, go with the short sale over the foreclosure. It’s the wiser decision — especially if you want to qualify for a home loan again in the next few years — in the long run.

Related Posts

Bank Foreclosure: Banks Walking Away from Foreclosed Homes

Home Foreclosure News: 9 Million Homeowners Could Go Into Foreclosure Between 2009 & 2012

Stop Foreclosure: How to Ready Your Home for a Fast (Short) Sale

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Visit this link to see which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Home Foreclosure News of the Day: New Requirements Imposed on Mortgage Services to Help More Homeowners Prevent Foreclosure?

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

Senator Jack Reed, (D, RI) got it right when he stated that regulators and officials at the Office of the Comptroller of the Currency (OCC) have done nothing more than proffer solutions that are “vague and toothless” and “a slap on the wrist” punishing the banking industry for how it’s handled the whole foreclosure crisis.

In the article, Senate Lawmakers Want Tough Approach in Foreclosure Talks, it seems that some of our elected officials are trying to give the government’s prevent foreclosure program some teeth, by introducing “. . . legislation to impose new requirements on the [mortgage servicing] industry, including a mandate that banks use a third party to review a delinquent borrower’s case before it goes to foreclosure.”

Post Continued Below . . .

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One Major Problem with HAMP & Other Government “Stop Foreclosure” Programs

They’d better make whatever they propose mandatory because the problem with HAMP and other government prevent foreclosure programs, was that banks didn’t have to comply. It was voluntary that mortgage servicers participate in programs to assist homeowners who were trying to stop foreclosure.

For the other, we continued to bail them out with TARP (Troubled Asset Relief Program) funds. Hence, they’ve never had a true incentive to work with homeowners to stop foreclosure.

They got the bailout funds – and promptly held on to them. They didn’t redistribute them in the form of home loan modifications and assistances to help with relocation efforts for struggling families.

No wonder they’ve come through the home foreclosure crisis just fine. Many are already profitable again. And yet, the home foreclosure crisis for homeowners rages on.

What’s wrong with this picture?

The money the government gave banks for them to ostensibly help struggling homeowners got distributed to the banks – and they recovered. But, the Average Joe is still struggling; still close to losing his home to foreclosure.

Ok, somewhere along the lines the buck stopped . . . but not at the doorstep of the Average Joe.

Related Posts

Foreclosure Clean Up: Why It’s Still a Leading Small Business Opportunity for 2011

Foreclosure Crisis Deepens Yet Again: The One Thing Lenders Won’t Do That Could Significantly Decrease Foreclosures Immediately

Stopping Foreclosure: Another Big Bank (HSBC) Suspends Foreclosures Because of Investigation into Robosigning

Home Foreclosures Being Suspended Across the Country: What It Means for the Average Joe Trying to Stop Foreclosure

Prevent Foreclosure News: Bank of America “Going to Bat” for Homeowners Trying to Stop Foreclosure

Home Foreclosures: Why So Many Homeowners are In Limbo When Trying to Refinance or Modify Their Home Loans Now

Prevent Foreclosure Help: Another Big Bank Not Playing by the Rules — If Your Mortgage is With Chase, You’re Screwed

Stopping Foreclosure: Big Bank That Received $25 Billion in Bailout Money Against Mortgage Modification Help for Homeowners

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Visit this link to see which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Can You Legally Take Ownership of a Foreclosure Property That Has Been Abandoned via Squatter’s Rights?

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

With the foreclosure crisis raging on, many who live right next to a foreclosed property, in the vicinity of some and/or who are interested in real estate investing are wondering, “Hmmm, can I just take over this property and claim squatter’s rights?”

With this in mind, we decided to take a closer look at exactly what squatter’s rights are – and if you can indeed take over ownership of a foreclosed property in this manner.

What are Squatter’s Rights?

According to the legal site, FreeUSLaw.com, squatter’s rights (aka land squatting, property squatting) are defined as:

. . . a laymen’s term for something called adverse possession in the legal world. And, indeed, one can lose their property through adverse possession . . . Under the law of adverse possession, however, it’s not as easy as just pitching a tent on a piece of land and after a certain period of time has passed claiming that it is yours.

Through adverse possession, someone must be on the land for a period of five to fifteen years, depending on the state. During that time, the person must hold the property hostile to the owner’s rights – in other words, the person couldn’t be there under the permission of the owner. The possession must also be open and notorious, i.e. the possessor is saying to the world, “This land is mine!” The possessor must also be holding the land exclusively for him or her self, and not for someone else.

Criteria That Must be Met in Order to Claim Ownership of a Property via Squatter’s Rights

So, several criteria must be met in order to claim squatter’s rights, ie:

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Time You Must Have Squatted on the Property: 5-15 or more years, depending on your state (in some states it’s up to 25 years).

Non-permission from Owner: If the owner gave you permission, it would be like renting/house sitting, for lack of a better phrase. Hence, you must be occupying the property WITHOUT the owner’s permission. This is a very important distinction to remember because otherwise, no matter how long you’re in the property, it still wouldn’t technically be squatting. It would most likely be viewed by a court as a matter of landlord rights vs tenant’s rights.

Non-secret: While you may be thinking, how can I occupy a property “in secret” and not have the owner find out – that is exactly the point. This gives more credence to your case as a squatter if you can prove, “Hey, I didn’t hide anything. The owner could have come and kicked me out at any time. But, they didn’t lay claim to it, even though it was public knowledge that I possessed the property.”

This gives your case more merit because it helps to prove that, people would be paying people to do this and many more owners would be in danger of losing property this way.

Now that you know the criteria that needs to be met in order to gain ownership of a property via squatter’s rights, let’s look at some reasons not to even go this route

3 Reasons NOT to Squat

Legal Challenges: In reality, it’s not easy to take someone’s property away in this manner. And, even if you meet all of the criteria, you may have an uphill battle if the owner(s) decide to take legal action.

According to the MSN.com real estate article, To squat or not: Can you take over the abandoned home next door?: ,

. . . squatters who take over abandoned houses face more legal challenges in the United States than in most other countries. This is true even in so-called “front-door squats,” where occupants make little effort to conceal their presence.

Lose Money: Piggy backing on the last point, it could get expensive – quick – if you choose to fight to retain the property. And, if you’ve put money into a property, this could be another loss if you lose. And, this can be hard NOT to do because if a property has been sitting empty for months or years, it’s bound to need some repairs.

This brings us to the last reason not to squat, which is . . .

Loss of Time: A court case could drag on for months or years. Not only does this cost you in the aforementioned “money”, it costs time to.

An Easier Way than Squatting to Legally Take Ownership of Foreclosed Property

If you think a property has been abandoned – by the lender of by the owner – contact them. Offer to buy the property for pennies on the dollar.

One way to come up with what “pennies on the dollar is” is to do some research. See if the property taxes have been paid. Many times the property taxes aren’t paid on abandoned properties.

And, many owners don’t have the money (or the desire) to pay them. This means an opportunity for you to pick up a property by just paying the back taxes owed on it.

Not only is it a more sure route than taking possession via squatting, it’s quicker also.

Adverse Possession Laws for Each State

Get a state-by-state breakdown of squatting laws; specifically, how long you have to be in possession of a property before you can legally claim adverse possession.

Related Posts

Buying a Foreclosure? Here’s the Difference between a Regular Foreclosure and an REO Foreclosure

Foreclosure Auctions: Mortgage Meltdown Brings New RE Investors to the Table

Buy Foreclosed Properties at a 40% Discount: Why This Isn’t Necessarily a Good Thing

How to Lose Your Foreclosed Home at Auction and Still Receive Thousands of Dollars

Foreclosure Auctions: Turf War Ensues Between Local Municipalities and Private Foreclosure Auction Firms (Opportunity Knocks for Foreclosure Business Owners)

Home Foreclosure News: More Foreclosed Properties Expected to Hit the Market, Presenting Opportunity for Homebuyers Willing to Take Risk

Want to Buy Foreclosed Homes or Clean Foreclosed Properties? Contact a Certified Foreclosure Real Estate Agent: Here’s How & Why

Buy Foreclosures Cheap: Just What the Housing Market Needs to Get Moving Again

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Business Owners! Visit this link to see which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Home Foreclosure News of the Day: 3 Big Banks Penalized for Not Meeting Government Foreclosure Prevention Program (HAMP) Standards

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!”

Bank of America can’t seem to do anything right lately when it comes to foreclosures.

Bank of America Can’t Catch a Break When It Comes to Handling Foreclosures

The largest bank in America was recently fined $20 million for illegally foreclosing on military homeowners. And, it was sued for trying to foreclose on a retired Florida couple who didn’t even have a mortgage — they’d paid for their home in cash. The couple had to sue them and threaten to repossess the bank’s furniture to get them to pay for their attorney fees because of the threatened illegal foreclosure.

What a PR nightmare! But, it doesn’t end there.

3 Large Banks Incur HAMP “Penalties”

Now it, along with two other banking behemoths, ie, Wells Fargo and JP Morgan, are caught in the cross hairs of the government’s preven foreclosure program.

The trio of banking giants are being denied payments by the government. The Bloomberg article, BofA, Wells Fargo and JPMorgan Penalized Over Foreclosures, explains, stating:

The banks are being penalized for failing to meet rules set by the Home Affordable Modification Program, or HAMP, which pays servicers to lower monthly mortgage payments for distressed homeowners. . . . “We don’t have the power to impose fines,” Tim Massad, acting Treasury Assistant Secretary for Financial Stability, told reporters. “We have the power to publicize what they’re doing. We have the power to withhold incentives. That’s what we’re doing.”

Infractions Banks Accused of That Led to Homeowners Not Being Able to Stop Foreclosure

Some of the infractions the mortgage servicers are accused of committing include:

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Not communicating with homeowners: A constant complaint from many homeowners seeking home loan modifications is that they get the run around — constantly being shuffled from one person to the next; never being able to talk to the same person twice; having to submit and resubmit paperwork; etc.; and

Miscalculating homeowner income: This caused many to be denied aid. And, as one of the knocks against HAMP has been that it hasn’t helped enough homeowners prevent foreclosure, the government can’t be at all pleased about this.

These are some of the primary reasons that Republicans are trying to end HAMP (Making Homes Affordable Program), stating that it hasn’t helped nearly as many homeowners as it was supposed to — and it’s been an unorganized mess since its inception.

And the average Joe? Well he struggles on while the banking giants purportedly get their houses in order (pun fully intended). 

Related Posts

Foreclosure Advice: Should You Continue to Pay Your Mortgage While You Wait for a Home Loan Modification?

Foreclosure Crisis Deepens Yet Again: The One Thing Lenders Won’t Do That Could Significantly Decrease Foreclosures Immediately

Foreclosure Homes for Sale: Banks Prolonging the Crisis?

Stopping Foreclosure: Obama Administration to Launch 2 New Programs to Help Homeowners Avoid Foreclosure (One is for Unemployed Homeowners)

Home Loan Modification: 65-75% of Loans Modified via HAMP (the Govt’s Home Affordable Modification Program) Likely to Go Bad

Home Loan Modifications: Why Federal Government’s Mortgage Modification Program a Mix of Good and Bad News for Homeowners

Prevent Foreclosure Advice: Obama to Stop Banks from Foreclosing on Homeowners?

Some Banks are Purposely NOT Foreclosing on Homeowners in Default: Here’s Why

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Visit this link to see which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.
P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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