WARNING: PAINFUL TRUTH ALERT
This post holds nothing back in the interest of “political correctness” or saving your feelings. The intent is to tell it like it is, not to hurt anyone’s feelings. There are too many people out there today telling homeowners in foreclosure what they want to hear instead of what they need to hear. If you think you might be offended or read something you don’t want to read regarding your situation, feel free to skip this post or, better yet, post a comment below.
News flash…not all homes can be saved from foreclosure!
It’s true…not every home can be saved from foreclosure. It doesn’t matter whether you get help from a foreclosure counselor or do it yourself. There are some situations that just cannot be saved.
Let’s take one common example…you’ve lost your job.
Here’s the situation. You bought your home a few years ago when you had a nice stable (or so you thought) job. Maybe your spouse also works to help support the family…maybe not. But now you’ve lost you job and have not been able to find another one.
It doesn’t matter whether you were fired, laid off, or quit. Your lender will not care what the situation surrounding your job loss is because it has no impact on your ability to repay your loan. It may be possible to work with your bank to get more time (often called a forbearance) before they start the foreclosure process. But unless you have a way to pay for your home, they will eventually foreclose.
News flash…not all homes should be saved from foreclosure!
Many people are trying to save homes they should never have been approved to buy in the first place. For several years, it was common lending practice to find extremely creative ways to put people into homes they could not truly afford.
There were stated income loans and low documentation loans. You could also get interest only, negative amortization, and balloon loans to make your payments more affordable.
This was all well and good (according to the mortgage industry) until the economy started slowing down and the housing market started sliding backward in many parts of the country.
All these cretive options were built on the assumption that home prices would continue to climb. The line of thinking was that It didn’t matter if the loan the person got was a toxic loan or if they truly couldn’t afford it because they would be able to refinance in 2 or 3 years into a more suitable loan.
Now all this creativity is coming back to bite homeowners and lenders.
If you had one of these loans, it may be possible to get your lender to renegotiate it and offer you better terms. But if you don’t have the income needed to truly qualify for the new loan, it’s going to be near impossible to save your home. If your home has depreciated far enough that you can’t sell it and you can’t afford to make the payments, the chance are very good you’re going to go through foreclosure…especially if you have more than one mortgage on the home and they’re from different lenders.
News flash…people do save their own homes every day!
It is possible to save your home…in the right situation. People do it every day. You can do it yourself or use a HUD counselor.
You have to understand, though, that regardless of how badly you want to save your home, you may not be able to. It’s mostly dependent upon your ability to repay your loan. If you fell behind because of a temporary problem that is taken care of now, there’s a good chance you can work something out.
As a starting point, you can go to any web site that has a mortgage calculator on it and plug in your numbers. If you can’t afford to pay somewhere near that figure, you’re going to be fighting an uphill battle.
This is a continuation from last Saturday’s post…Thinking Differently…you might want to check that out too.
Do you need help writing a real estate hardship letter? Would you like a free, downloadable sample to get you started? Click here.
If you were offended or read something you didn’t want to read regarding your situation, please post a comment below to tell everyone about it.
Tags: counseling, hardship, lender mediation, lender negotiation, loan modification, workout plan
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