What If I’m a Year Behind in My Mortgage Payments?
You may be behind only two months in your mortgage payments or up to two years behind! Wherever you may find yourself on that scale, the question is, what do you do and what’s going to happen? First and foremost, let’s be clear that it is vitally important that you keep in good communication from the get-go or as soon as possible. The longer you avoid notices due to embarrassment or denial, the worse things can get.
Lenders are usually very willing to work with you UNTIL a Notice of Default is filed. Once one of these is filed, it is very hard to work with your lender as they are looking out to protect their interest. So, be sure to communicate early and often. Also, keep a clear record of every time you communicate with your lender: the day you called, the name of the person you talked to and what you talked about. This can only help you later down the road. Remember, lenders do not want to foreclose, so if you’re unable to fulfill your mortgage obligation, contact your lender immediately so they can give you options to help you.
Options may include:
- –time to make up your payments. You may be granted something called forbearance, an agreement from the lenders to not take action against you while you work out a repayment plan that is affordable for you.
- -forgiving a payment. The lender may grant you debt forgiveness, which means they may let you skip a payment or two if you can prove that you will be able to pay thereafter. However, this rarely happens.
- –repayment plan. Sometimes you can spread the missed payments out over a longer-term. For example, if your mortgage is $900, you may pay $200 more a month until you’re caught up, temporarily making your payments $1100.
- -change the terms of your loan. Maybe your interest rate can be adjusted or maybe your amortization period can be extended.
- –refinance. You may be able to add the back payments to the balance of your loan if you have sufficient equity.
- -partial claim. Some government loans have provisions that allow the borrower to apply for another loan to pay back the missed payments if they meet certain criteria.
The above are routes of action if a Notice of Default has not yet been filed. if one has been filed, your remaining options are to reinstate your loan, sell your home, consider a short sale or sign a deed in lieu of foreclosure.
To learn more, contact Advantage Legal Group.
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- Is a Short Term Rental a Better Option?
- How to Say Goodbye to Renting and Hello to Buying
- Why do Mortgage Investors Deny Loan Modifications?
Advantage Legal Group is in the business of helping people that are in financial distress either modify their existing mortgage, refinance or find a way to mediate between the lender and the homeowner. We get asked quite often if homeowners can refinance after a mortgage modification.
A mortgage modification is typically handled between a housing counselor or a qualified attorney and the homeowner and lender. The homeowner cannot go to the lender directly and ask for this mediation but must do so with a housing counselor or lawyer. This is where Advantage Legal Group comes into play. We talk to the lenders for you and make them come to the table to discuss options to either lower your mortgage payment permanently or for a short amount of time. We can modify your existing term, save you thousands and get you caught up on any past mortgage payments.
Often times we get asked if people can refinance after they’ve already had a mortgage modification. Refinancing may not have been an option initially but now that they have dealt with the modification for several months they may want to refinance. Some homeowners that have gone through the Home Affordable Modification Program may now want to refinance to a permanent lower rates. With rates continuing to creep up this is not a bad idea.
In order to qualify for refinance after modification you must have made at least 24 monthly mortgage payments consistently since the modification was completed, not since you’ve applied. If there was an additional second mortgage in place that waiting time qualifies. If you’re purchasing or refinancing at different property that did not undergo the modification you only need to wait one year.
All of these qualifications still apply whether you’re refinancing or buying a new home. You can’t modify a mortgage and then sell that home in the next two months. You must make consistent payments for at least 12 or 24 months depending on your situation before your allowed to refinance or apply for a new loan. Of course you can sell the property but you cannot apply for a new loan after that particular waiting period.
Feel free to view our video below on mortgage mediation and how Advantage Legal Group has helped hundreds of Seattle area residents keep their homes and lower their mortgage payments by refinancing or mortgage mediation.
Refinancing, buying a new home or mortgage modification definitely is something to be discussed with a lender or qualified housing counselor or attorney. For more information contact Advantage Legal Group and thank you to our guests blogger this month Tina Droessler. Tina is an expert real estate professional in Palm Desert and helps dozens of homebuyers and homeowners each year find or keep the home of their dreams.
Will a Mortgage Modification Work for Me?
To hear the term, “mortgage modification” incites both hope and fear. Why because it is a way to save your home, but very few achieve it. Even housing counselors admit that there’s seemingly something mysterious that dictates who actually qualify for a mortgage modification but there ARE ways homeowners can better their chances.
Tips for getting a mortgage loan modification:
1) First, homeowners need to gather together and submit paycheck stubs, a hardship letter, a budget and any other documents that the loan servicer is going to want. You don’t want to miss ANYTHING because if you do, your loan file gets tossed aside to deal with a package that IS complete.
2) Next, you want to ask questions. Be certain you know exactly what to provide to servicers. Servicers often ask for two paycheck stubs assuming that two paychecks represent one month’s income. But a homeowner who is paid weekly, bimonthly or monthly may have to submit more or fewer paycheck documents. See the misunderstanding here? Similar misunderstandings on other documents can cause big problems.
3) Additionally, you should keep contact/communication current. Homeowners should call the servicer at least weekly to check on their request. Ask if your package is complete and review the documents. Explain any and all special or changed circumstances. Counselors do help but lenders also want to hear from the homeowner often.
4) Lastly, be persistent. Of course, you’ll feel frustrated and annoyed when asked to resubmit documents. However, if you simply realize you’re at their beck and call and hang in there, you just may be rewarded in the end!
Some more tips:
Through all the above tips, remember to be FLEXIBLE…loan modifications come in many varieties. Consider taking what you can get.
Also, release your tax return. Homeowners are required to not only submit income documents but also sign IRS Form 4506-T, which allows the servicer to access the homeowner’s federal tax returns. People often don’t succeed because their unable to provide good proof of income.
Contact Advantage Legal Group to get started on mortgage modification in Seattle.
Is Bankruptcy Scary?
Bankruptcy scares people. In fact, even people up to their eyeballs in debt, are scared witless by the thought of filing bankruptcy! It seems absurd almost.
What ‘s so scary about filing bankruptcy?
There are three unspoken fears about bankruptcy:
- -loss of control over financial affairs
- -the future with a bankruptcy on their record
- -public exposure as a failure with their finances
Let’s look at these scary aspects, in broad daylight and see if there is anything worthy of tremble and fear.
Loss of control
Filing bankruptcy passes nominal ownership of everything you have, outside of some kinds of retirement assets, to the Chapter 7 trustee for the benefit of your creditors. On the surface that does sound kind of scary. However, nearly 98% of Chapter 7 cases are no asset cases. That means that the debtor loses nothing to the bankruptcy trustee on behalf of creditors.
This is because their possessions have little net value or an exemption protects the asset for the debtor’s benefit.
In some situations, it may be hard to tell what assets are worth or whether they are saleable. The uncertainty makes it unpredictable to pass control to a trustee. That’s a case for a Chapter 13 because the debtor keeps everything he wants to keep, and pays some fraction of their value to creditors over time by cash. The debtor proposes the plan, suggests the values, and can get out of bankruptcy if the case should take an unexpected turn they weren’t hoping for.
Future credit in doubt
The commercials that try to sell you some for-profit solution to your debt problem scare you by saying that you’ll never get credit again if you wipe out your debts in bankruptcy or they tell you you’ll have to wait a good ten years before you can get credit, but it’s nonsense.
Bankruptcy makes you almost instantly a better credit risk than you were before you filed. Does that sound crazy? The reason is because now there are fewer demands on your income.
Bankruptcy is more expensive right after filing, but all things being equal, the cost of borrowing goes down the farther out you get from bankruptcy.
The truth is the availability of credit and its cost depends on a lot of things and no one can predict them all.
However, this is a hard cold truth you should know…. loaded with debt, you probably couldn’t get more credit now even if you didn’t file for bankruptcy. SCARY!
Bankruptcy may make you feel as if you’re going to be drug out to the town square to be tarred, feathered and ridiculed, but this is simply not true.
Most of that view of bankruptcy is all in your mind. Bankruptcy cases are in the public record, and anyone who wants to find out can find out, BUT, how much time do you spend figuring out which of your neighbors and coworkers have filed bankruptcy? See? Nobody cares! And, anyway, you would also be surprised at how many people, famous and anonymous, have filed bankruptcy themselves. Studies show that job loss, divorce, and illness account for a large percentage of debts leading to bankruptcy. You are NOT the only one to ever travel this road and it doesn’t make you less of a person!
These absurd fears need to be knocked down a notch or two or three!
Not so scary
Bankruptcy is nothing to be afraid of but not fixing a problem that has a solution is!
Don’t Go it Alone – The Washington Fairness Foreclosure Act
There are still many homeowners facing foreclosure. For the last three years, Advantage Legal Group has been doing much to inform those homeowners about the hope they may have in the Fairness Foreclosure Act. Their efforts have been pretty successful and they’ve saved the homes and lives of many clients. However, now there’s a new thing to make people aware of…the danger of trying to do it yourself.
There are people who do indeed know about the Washington Fairness Foreclosure Act but instead of obtaining a lawyer to or credit counselor to request mediation, they try to request it themselves only to be turned down time and time again, all the while, racking up additional fees each time they try. These fees WILL eventually have to be paid somehow, and these people may now face the reality of losing their homes AND paying the fees!
Related: The Ultimate Home Sellers Guide
Save yourself a lot of time, heartache and money!
Save yourself time, heartache and money by getting yourself an attorney or credit counselor to set up the mediation for you. You cannot go it alone. These people keep getting turned down for mediation because homeowners can ONLY be referred to foreclosure mediation by a housing counselor or attorney. The counselor or attorney will determine the homeowner’s eligibility for mediation and may make a referral on their behalf to the Department of Commerce for foreclosure mediation. Eligible homeowners will then be assigned a mediator by the Department of Commerce to conduct the foreclosure mediation process that has been established under the Act. Additionally, although not required, the homeowner may also benefit from having the counselor or attorney present during the mediation to assist/represent them during the process. The lender is also usually represented by their own lawyer.
Bankruptcy Fees are Goin’ UP!
As of June 1st, 2014 the Bankruptcy Court will be increasing its fees for filing and general services. Periodically the filing fees in the U.S. federal and state courts do increase and that’s why we’re seeing this happen. If you are considering filing bankruptcy, now may be a good time to get going on filing that petition in order to avoid the fee increase. It may not be a huge increase, but it’s still an increase and if you’re at the point of considering bankruptcy you obviously have a desire to start being smart with every penny you’ve got!
More: –Should I File Bankruptcy?
There are several bankruptcy fees that will increase on June 1st under amendments to the Bankruptcy Court Miscellaneous Fee Schedule that were approved in March by the Judicial Conference of the United States.
– The adversary filing fee in bankruptcy proceedings will increase from $293 to $350, a $57 increase. This new fee is equivalent to civil filing fees in federal district courts.
To learn more about the bankruptcy process or the different types of bankruptcy, or anything bankruptcy related for that matter, check out our blog or these specific articles:
The Foreclosure Fairness Act
A little known law helps protect homeowners from foreclosure even when their situation may seem dire. The Department of Commerce is trying to spread the word about this law and Advantage Legal is here to help.
The Washington State Department of Commerce put out a press release to let people know about this Act that helps primary residential owners go into mediation with banks via a counselor or lawyer and look at alternatives to foreclosure. It’s a great way for homeowners to get help without the frustration of getting lost in the paperwork.
This Act is huge for homeowners who are scared of losing their home or frustrated with the process of trying to save it. This Act along with experts like those at Advantage Legal bring happiness and relief to many Washington families.
Each individual case is different but the Foreclosure Fairness Act and Advantage Legal were able to help one particular family who hasn’t paid their mortgage since March of 2009 and their unpaid amount plus their principal balance totaled approximately $511,488, with the help of the Act and Advantage Legal they were forgiven the amount of $256,488. WOW! That’s a forgiveness of almost half of what they owed. They were also able to get their monthly payment cut almost in half and their interest rate went from 8% down to 5%.
These kind of results are almost impossible to get on your own without the help of experts like Advantage Legal. If you’re not sure if you qualify under this law, you can go to advantagelegal.com or call their office at 1-877-mediation to get a free consultation to discuss your situation.
For more information on related topics check out:
What Happens if the Bank Forecloses on My Short Sale?
It happens quite often…more than you realize…that a home in process of a short sale is foreclosed on. It is a common misconception that the lender won’t file a foreclosure lawsuit against you if you are currently in the process of negotiating a short sale or loan modification.
Debbie lists her home for a short sale in November and receives a contract from a buyer. While waiting for the bank’s approval, at the end of April gets served with foreclosure papers. How can this be if she has a contract on the property?
It can be. And again, is quite common. You should expect to get served with a foreclosure lawsuit four months or so after you stop making mortgage payments. When you try to complete a short sale, it more often than not takes a month or two to get it under contract and 45 to 90 days to get an approval from the lender. If you fail to respond to the foreclosure within 20 days, you will be in default and will have waived valuable rights in defending the lawsuit in case the short sale falls through. It is recommended that you see an attorney about responding to the lawsuit.
For more information on mortgage mediation, foreclosure, short sales, bankruptcy and all things related to personal finance, check out Bellevue Bankruptcy Blog. These topics and issues can be confusing and stressful, but help is available! Contact us today!
More tips on Short Sales:
U.S. Foreclosure Inventory Goes Down
The May International Foreclosure Report from Corelogic is showing a 29% decrease in inventory from a year ago. According to their analysis there were 52,000 completed foreclosures in May 2013 and 71,000 in May 2012. That’s a 27% decrease.
As of April 2013, current shadow inventory, that’s inventory owned by the bank and not yet on the market, was under 2 million units. 2 million units represents a supply of about 5 months. Since its peak in 2010, the overall shadow inventory is down 34%. It is down 18% from a year ago.
Completed foreclosures indicate the number of homes actually lost to foreclosure. Before the decline in the housing market in 2007, completed foreclosures averaged about 21,000 per month between 2000-2006. 52,000 foreclosures were reported for the month of 2013! Since the financial crisis began in September of 2008, there have been about 4.4 million completed foreclosures nationwide.
Come May 2013, approximately 1.0 million homes were in some stage of foreclosure. In other words that was the amount of foreclosure inventory nationwide. In May 2012, it was 1.4 million. This is a year to year decrease of 29%. The foreclosure inventory of May 2013 represented 2.6 of all homes with a mortgage. In May 2012, it represented 3.5 percent.
Should I Hire a Lawyer for a Mortgage Mediation or Foreclosure?
If your lender has failed to approve previous effort to modify your loan, often mediation is the best way to go. What is mediation? Foreclosure mediation is a meeting where a homeowner and mortgage lender negotiate potential modifications or other alternatives before an impartial Judge in an attempt to reach an agreement. And this kind of mediation requires the expertise of a lawyer.
Why hire a lawyer? The most common question asked when someone is facing foreclosure is, “What will give me the best chance to avoid this?” Although circumstances involved always vary greatly, the answer ALWAYS remains the same. And that answer is this, ” to fully and most completely use all your rights and remedies including: foreclosure defense, loan modification, mortgage mediation and bankruptcy, you MUST be represented by a foreclosure lawyer…an EXPERT foreclosure lawyer.”
Beware of scams and make sure your lawyer is an expert. Anyone who generally guarantees they’ll save your home, is either a scam artist or ignorant or both. Additionally, the person at the bank may be a brand new hire who knows nothing or someone who actually knows what they’re talking about. Either way, the next time you call, you may get the new hire. You want an expert, the same expert, and throughout the whole process.
An expert can help you understand the debt and tax consequences of a short sale, protect you from pitfalls and scams, assure you that, should foreclosure happen, you have the right to stay in your home for as long as your rights and remedies allow and enable you to plan where you’ll live next without fear of the sheriff showing up and ordering you to leave. An expert lawyer can also, in most cases, help you to be debt free when you leave should foreclosure be inevitable in your case. And of course, an expert lawyer can help you come to an agreement with your lender that avoids foreclosure all together.
Yes, these kinds of lawyers can be expensive but hiring an expert almost always benefits you not only financially but emotionally. The benefit of avoiding the loss of your home is obvious. But should you lose your home, remember, as mentioned before, there are pitfalls and scams to avoid and knowledge to be learned about debt and taxes that come with certain mediation agreements.
To contact an expert representative today, visit Advantage Legal Group.