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Fannie and Freddie Won’t Evict Foreclosed Home Owners During Holidays

December 3, 2011

Fannie Mae and Freddie Mac won’t evict families from their homes during the holidays, but will continue to process foreclosures.

Lending giants Fannie Mae and Freddie Mac won’t evict foreclosed home owners between Dec. 19 and Jan. 2, the lenders said in releases Thursday,December 1st.

Notices of default, notices of auction sale, and foreclosure auctions will continue normally. But borrowers whose homes have been sold at auction or taken back by the government-owned mortgage agencies will be allowed to stay in their property through the holidays.

The two companies own about half of all mortgages, Fannie Mae spokesman Andrew Wilson said. Home owners in the midst of the foreclosure process can check to see whether Fannie or Freddie own their loans at fanniemae.com/loanlookup or freddiemac.com/mymortgage.

Home owners who have been foreclosed, but who still live in their houses, will receive notices from Fannie or Freddie if the lenders are involved.

This is good for home owners because it allows more time for a short sale. A short sale allows the home owner to end the process with dignity and possibly remove all of the remaining mortgage balance. I recently stopped a foreclosure auction on a Freddie Mac loan with a 13 day short sale approval. There is still time! Visit this page to review your options: avoid foreclosure.

Foreclosure Help: 5 Pros You Need on Your Team

January 24, 2011

If you have tried every avenue and are still in a foreclosure situation, come out of it the best way you can. Make sure that you have the right team in place to minimize your loses and help pave the way for your future. It doesn’t benefit you to “just let it happen” – take control and make it work for you. That starts with knowing which experts provide foreclosure help–often at no cost to you–and how to find them.

1. A foreclosure counselor

Your first step to get foreclosure help should be contacting a foreclosure counseling agency approved by the U.S. Department of Housing and Urban Development.

“A foreclosure counselor should help you evaluate your current financial situation by looking at your bank statements, tax returns, and monthly expenses and income,” says Kimberly Allman, manager of homeownership preservation at the New York Mortgage Coalition in New York City. A foreclosure counselor also can help you understand the programs available through banks and government agencies and serve as an advocate to help you communicate with your bank.

And don’t worry about money–foreclosure counselors provide foreclosure help for free. Find one at NeighborWorks America or by calling HUD’s foreclosure counseling hotline at 800-569-4287 or its foreclosure prevention hotline at 888-995-HOPE (4673).

2. A REALTOR®

A REALTOR® can help you find out if a short sale, rather than a foreclosure, is the right path for you. Use this pro to discover if you can sell your house, how quickly, and at what price. In most cases a short sale is possible! RE/MAX Professional Associates has a short sale team that is ready to move on your home because time is of the essence in this situation. The sooner you get us started on this – the sooner you are in a more comfortable situation with less stress (and less phone calls from creditors).

If a short sale seems right for you, make sure your agent is experienced with these. If not, ask for a recommendation for one who is. Short sales are tough to navigate, and they’re further complicated by your loan type–FHA vs. Veterans Administration vs. conventional loans. Real estate agents who specialize in short sales will know the proper steps and order of the steps involved. They’ll also be able to navigate the many parties involved in the process and over-burdened loss mitigation departments.

Look especially for agents who have the Short Sales and Foreclosure Resource (SFR) Certification, which requires specialized training.

3. A tax expert

You’ll need a tax expert for foreclosure help if you do a short sale or deed in lieu of foreclosure. Consult with a qualified tax adviser since forgiven debt may be taxable income, says Nancy Polomis, chair of the real estate development department at the law firm of Hellmuth & Johnson in Eden Prairie, Minn. You’ll face myriad other foreclosure-related tax issues as well, which require professional advice.

Tax advisers’ hourly rates range from $150 to $250, depending on where you live. A good choice is a certified public accountant. Check with your local CPA society to see if its members offer free advice at volunteer events like those sponsored by the Illinois CPA Society. Find a list of state CPA associations at TaxSites.

Another qualified tax adviser is an enrolled agent. EAs, like CPAs, are licensed to represent clients at an IRS hearing. Find an EA at the National Association of Enrolled Agents.

4. A credit counselor

If you’re having trouble getting a loan modification, a credit counselor can give you some foreclosure help. According to the National Foundation for Credit Counseling, a counselor can advise you on managing your money and help you develop a plan to help you avoid future financial difficulties. “Often people need credit counseling because the one thing that’s holding them back from getting an affordable loan modification is high credit card payments,” says Allman. Even if foreclosure is inevitable, credit score repair can help you get back into a home sooner.

Allman often refers foreclosure clients to the nonprofit Greenpath Debt Solutions, which operates in many states. You can find a list of government-approved credit counselors from the U.S. Trustee Program.

5. An attorney

Once your lender has filed a foreclosure lawsuit, contact an attorney. A lawyer can review the lender’s foreclosure papers to determine if it actually owns your mortgage or whether your loan servicer has made mistakes in applying your payments or assessing fees, says Lisa A. Magill, an attorney at Becker & Poliakoff in Fort Lauderdale, Fla.

You may be able to avoid foreclosure, or even a short sale, if you just have more time to sell your home, acquire secondary financing, or get a new job. For example, a lawyer can usually make arrangements with the lender to give you more time by filing responses and motions in the lawsuit, says Magill.

Also consider consulting a bankruptcy attorney, who can help you discover whether bankruptcy is a viable option for avoiding foreclosure, says Polomis.

Lawyers charge $150 to $300 per hour or a flat fee of $1,000 to $2,500 to defend a foreclosure action or file a bankruptcy petition. Contact your local legal aid office, such as the Mid-Minnesota Legal Assistance, or your local bar association, like the Florida Bar, for a list of agencies that offer free legal representation. A list of state resources may be found at the National Legal Aid and Defender Association.

Before making your decision to short sale or foreclose – give me a call. We can work through this together and find the right course of action for you. Not every person and situation is the same and I’m ready to find out what is going to the best for you.

5 Steps to Owning a Home Again After Foreclosure

November 22, 2010

It’s nice to know that there are options for home ownership after a foreclosure but it’s even better to know that there are options prior to foreclosure. If you are facing foreclosure, contact a member of our Stop Foreclosure Team at RE/MAX Professional Associates. You might be able to avoid it all together. If you have already been through it, this article can give you some steps to becoming a home owner again. I can recommend a mortgage broker in your area and put you back on the path to becoming a home owner again.

Foreclosure is just a one-time event–with discipline and perseverance, you can get a mortgage and become a homeowner again.

1. Stick with a job after foreclosure

Did you fall into foreclosure because of the lack of a steady job? If you did, the first step toward homeownership after foreclosure is finding and holding one. And if you already have one–stick with it, unless you can move to a better one. Note that potential lenders will require stable employment before they’ll give you a new mortgage loan after a foreclosure. Even if it means taking a lower-paying job, it’s worth it.

2. Rebuild your nest egg after foreclosure

Establish a safety net. Financial planners generally recommend three to six months of living expenses in a liquid account, but since you’re coming out of foreclosure, six is a minimum to show stability and that you’re able to pay your bills–including your mortgage–for an extended period if you lose your job.

3. Raise your credit score after foreclosure

This is the hardest and most time-consuming part. After foreclosure, your credit score, according to myFICO, probably dropped by about 150 points. You’ll need to raise it back up with perseverance.

Pay bills on time and keep your credit card balances below maximum levels. The foreclosure will stay on your credit report for seven years, but if you prove your money management skills have matured, it will become less of a red mark as years go by.

Tip: Consult a housing counselor. The U.S. Department of Housing and Urban Development offers free housing counseling for distressed homeowners with a foreclosure in their past. A counselor can help you with money management and budgeting. Counseling works–an evaluation of a program in Indianapolis discovered that credit scores greatly improved because of education and counseling, and increased average borrowing power by $4,500 per family.

4. Reduce your waiting time for a mortgage after foreclosure

Normally, you would have to wait seven years after foreclosure before you can apply for a new mortgage under Fannie Mae rules. (Fannie Mae changes rules frequently. You can check the latest rules at Fannie Mae’s site.)

However, you might wait only three years if you can show extenuating circumstances for your foreclosure, which are defined as “events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.” These include:

Losing a job

Getting divorced

Having unexpected medical expenses

There’s one last alternative if waiting isn’t your thing–you can obtain seller financing, essentially bypassing the traditional mortgage. If both parties are amenable, you can enter into a lease with an option to buy, or take a mortgage directly from the seller. You’ll most likely have to show some hefty reserve funds, but if you’ve turned around your financial situation quickly after your foreclosure, it’s worth a shot to deal directly with the seller.

Keep in mind that sellers may be motivated to agree to this if they need to sell and the potential buyers they’ve met with can’t obtain a conventional mortgage–perhaps because they’ve been through foreclosures, too.

5. Be honest about your foreclosure

When you’re ready to apply for your new mortgage, don’t try to hide your foreclosure. On the contrary, be proactive and reveal the steps you’ve taken to remedy the problems that led to your foreclosure.

Tip: Try a mortgage broker, who can work with a variety of lenders to find you a loan. When you work directly with a retail lender, like a bank, they have a limited pool of loans to offer you. But a good mortgage broker–one with a vast network of lenders has many options, and may be able to find a mortgage solution if the foreclosure in your past is creating challenges in obtaining one.

If you stay disciplined and positive, the American dream–obtaining a mortgage and owning a home of your own–can, indeed, be yours again. Even after foreclosure.

Barbara Eisner Bayer has written about mortgages and personal finance for the past 16 years for the Motley Fool, the Daily Plan-It, and Nursevillage.com, and has been the Managing Editor for CompleteGrowth.com, Mortgageloan.com, and Credit-land.com. She’s grateful that she now knows where to turn if she ever struggles to meet her mortgage payment.