Stop Foreclosure Answer

I don’t know if you realize this.

As the people in the United States have become more aware of the foreclosure crisis and the devastating impact it is having on the people facing foreclosure and their families, more and more people, organizations and state agencies are coming to their aid.

Since early June, I have come across new initiatives in various states. Let me tell you about a few.

The state of Maine has created a toll free foreclosure prevention hotline. The state has also set up a frequently asked questions section on the Maine Bureau of Consumer Credit Protection website. Last they are trying to establish a one page legal document that people facing foreclosure can use to respond to any foreclosure action filed against them.

The toll free hotline is interesting. Residents of Maine who are behind on a mortgage payment or are facing foreclosure are encouraged to call the hotline. When they do, they are given the names of housing counselors in their area. They can contact one of these and ask for assistance.

In the frequently asked questions section they can learn about their rights in the process. The legal document will help standardize the initial response from a person facing foreclosure. It should help them when their mortgage company starts the foreclosure process.

The governor of the state of Washington has announced that a Home Foreclosure Legal Aid Project has been established. Initially almost 270 lawyers in Washington have signed up for this project. They have agreed to give free legal aid to people facing foreclosure. The objective is to help these people and their families save their homes. The state Bar Association predicts that the number of lawyers participating in this program will grow to at least 500 as more lawyers find out about it.

On June15 the state of California started a foreclosure moratorium. This moratorium added 90 days onto the period of time between when a person defaults on a mortgage and when their lender can take possession of their home through foreclosure. The intent of this 90 day moratorium is to get the mortgage companies to seriously look at offering loan modifications to people facing foreclosure that will enable them to save their homes. California has the highest foreclosure rate in the country. The state legislators are trying to reduce that.

You can be sure that every other state will monitor the results of these initiatives in Maine, Washington and California. If they are successful, more states will be implementing them.

Much Success,

Mark Elkins

On June 9 the Attorney General of Massachusetts announced that Fremont General, a bankrupt subprime lender, agreed to a settlement of $10 million. It was alleged that the company had used predatory lending practices that led to foreclosures in Massachusetts. In the settlement Fremont denied that they did anything wrong.

Fremont had been a large subprime lender in the United States. In 2008 it filed for bankruptcy protection. The settlement also made permanent an injunction ordered by a court in Massachusetts in 2008. This injunction required Fremont to obtain approval from the court before foreclosing on any home where their loan had terms that were unfair to the borrower.

You might wonder what this means for you.

If you have a mortgage through Fremont, I suggest that you have all of the papers you got with that loan reviewed by a lawyer who specializes in foreclosures. There may have been language in those papers which was deceptive or predatory. If there is, the lawyer can negotiate with Fremont to modify your loan, lower your monthly payment and stop the foreclosure process.

If Fremont is not your mortgage company but you do have a subprime mortgage, I suggest that you contact a lawyer and ask them to review the all of the papers you got with the mortgage. The attorney generals in other states have taken action against other mortgage companies because of unfair, deceptive and predatory lending practices. Two of these were Countrywide and Option One.

If your lawyer finds that your mortgage company used unfair, deceptive or predatory lending tactics with you when you got your loan, they can get your company to modify your mortgage in your favor. That will lower your monthly payment and save your home from foreclosure.

Much Success,

Mark Elkins

When it comes to foreclosures most of our focus is on the person facing foreclosure. We look at the impact the foreclosure may have on them and their family. You may not realize it but mortgage companies and investors are also affected.

Most people think that when a mortgage company acquires a home through a foreclosure, they make out. They turn around, sell the home and come out way ahead.

Let me tell you that is not true. I have seen several different reports which indicate that a mortgage company loses between $50,000 and $60,000 on every foreclosed home that they sell.

How does that happen? Remember – a mortgage company’s primary business is to loan money. They do not want to sell real estate. When they acquire a foreclosed home, they have to sell it. At the present time it is taking about 10 to 12 months to sell a home in most parts of the country.

Because it is a foreclosed home, the price at which it is listed for sale will normally be lower than similar homes around it. The reason is simple. The longer it takes to sell the more it costs the mortgage company. They have to pay the taxes, insurance and utilities. So the mortgage company will offer it at a lower sale price to try to sell it more quickly.

When a foreclosed home is listed, everyone knows that it is a foreclosure. Most people believe that they can get it for a steal. Potential buyers will offer far less than the current list price on it. The mortgage company is afraid that if they turn down an offer, it may be a long time before they get another one. So they are more inclined to accept far less for the home.

The money the mortgage company loses is the difference between the balance of the mortgage at the time of foreclosure and the net amount they get from the sale. In addition to this they also have their own administrative costs while the foreclosure process was going on.

So if you do the math, you can see quickly how much a mortgage company can lose. They lose between $1,000,000 and $1,200,000 on every 20 homes they acquire through foreclosure. Not a small amount during this foreclosure crisis.

Every time a person facing foreclosure is able to reach agreement with their mortgage company on a modification to their mortgage which will enable them to save their home, the company does not lose as much money. Favorable loan modifications benefit the mortgage company as much as they do the person experiencing financial hardship.

If you are facing foreclosure, remember this. If the foreclosure goes through and your mortgage company gets your home, it is going to cost them between $50,000 and $60,000. Use that in your negotiations with them. Get a modification which will lower your monthly mortgage payment that you can make without difficulty. Get help with this from a lawyer or an expert in loan modifications.

Much Success,

Mark Elkins

Found some interesting information that I had to pass along to you today.

As you know, I stress that if you are facing foreclosure, you should get the help of a lawyer or an expert in loan modifications to help you rather than trying to do it all by yourself.

There is an organization, NeighborWorks America, which congress designated as the administrator of the National Foreclosure Counseling Program at the end of 2007. NeighborWorks America funds the counseling provided by outside agencies for people facing foreclosure.

Several times since it became the administrator of this program, NeighborWorks America has sent reports to congress updating them on the results. Their latest report was at the end of May. This report has the results of the program from March of 2008 through February of 2009.

During that period of time over 373,100 people struggling to make their mortgage payments were helped. The results were:

25% of the total had their loans modified and their monthly payments lowered. They were still in their homes at the end of February.

Only 2% lost their homes.

The remaining people were still in negotiations with their lenders and remained in their homes.

The last item confirms what I have known for quite awhile. Mortgage companies are not acting quickly on loan modifications.

NeighborWorks America went on to report that those people who sought counseling help early had a better chance of saving their homes than those who sought help much later.

Now catch the change here. 60% of those who were more than four months behind on their mortgage payments at the time they sought help were at a high risk of losing their homes. Wow, I never realized what a difference a month could make.

The news media has been reporting right along that loan modifications don’t work. They report that over 50% of the people who have had their loans modified fall behind on their mortgage payments again and are in danger of losing their homes. Yet NeighborWorks America indicates that only 2% of the people who had been in the National Foreclosure Mitigation Counseling Program between March of 2008 and February of 2009 have lost their home.

What does this really mean?

That tells me that most of the people in the reports by the news media have not sought help from anyone. They tried to negotiate with their mortgage company on their own. They accepted what their mortgage company offered. The way their loan was modified did not help them from falling behind on their payments again.

The other thing that these results confirm is that the earlier a person facing foreclosure gets help the more likely they will be to save their homes.

So I urge you again. If you are facing foreclosure, your best chance of saving your home and protecting your family is to get help from a lawyer or an expert in loan modifications as soon as possible.

Much Success,

Mark Elkins

You may be in the middle of a financial hardship. Perhaps it was a job loss and you fear that it may be months before you get another. Maybe there are mounting medical bills and these are draining your savings. It may have been a divorce and suddenly you can’t make ends meet financially.

It’s becoming more and more difficult for you to make your monthly mortgage payment. You’re worried because you see all of these reports on television and articles in the newspaper about the mortgage crisis and foreclosures. Can this happen to you?

When does a mortgage company start to foreclose on a person who has trouble making their mortgage payments? How soon does the person lose their home?

First – Stop that thinking right now. Don’t worry about something that probably won’t happen.

If you haven’t missed a mortgage payment yet, your mortgage company won’t do anything. Let’s say that you can’t make your payment by the first of the month. Your payment is not marked late unless your mortgage company does not receive it by the end of the month. If you make the payment anytime during the month it is due, it is not reported as being late to the credit bureaus. You may have to pay a penalty if it is paid after the 15^{th of the month.}

If you are not able to make a payment during the month in which it is due but are able to make it before the end of the following month along with the payment due that month, you are only one month behind. It will appear on your credit as a late payment. However, your mortgage company will not do anything.

If you are unable to make your mortgage payments two months in a row but then are able to make a payment in the third month, two late payments will appear on your credit report. Typically your mortgage company will not do anything.

In most states mortgage companies don’t start the foreclosure process until a person has not made a payment for three consecutive months. That means that the company has not received a payment typically in 90 to 93 days.

A representative from the mortgage company typically will call the person once a payment is missed. Calls will be made more frequently as time passes without a payment being made. However, the foreclosure process typically does not start until sometime during the fourth month after which the last payment was made.

If you want to keep the process from starting, then make at least one payment before the end of the third month. Continue to make a payment every month after that.

If there is no way to catch up in the near future and you have enough to make a mortgage payment every two months, then make a mortgage payment every other month. You will incur late fees. However, the mortgage company will not start the foreclosure process.

If you fall behind on your mortgage payments, the anxiety and worry you will experience are going to have a negative impact on you and your family. You may be able to juggle the payments to stay ahead of your mortgage company starting the foreclosure process. However, the worry and anxiety are still going to be there. I urge you. Don’t let it get that far.

Before you get into this predicament I highly recommend that you consult a lawyer or an expert in helping people facing foreclosure. Explain your situation to them. They will be able to let you know what can be done. They will also help you understand the steps to take to avoid foreclosure and protect your family.

Much Success,

Mark Elkins