This is great news, but there is a down side.  In the process of saving your home, you may lower your credit score. Anytime you are delinquent, have your payment adjusted or loan terms adjusted, you take a credit score hit.

Some homeowners who opted into a trial modification under Making Home Affordable are finding this out the hard way.  They make a few payments at the lower amount, only to find out their score has dropped.  Being in the trial program is no assurance they will even be accepted for permanent modification, yet they are penalized about 100 points just for asking for help.

The credit industry is, of course, quick to defend this practice of penalizing those who even ask for a change in loan terms.  The government realizes this is a side effect.  Consumer advocates deplore the practice on the grounds that people should not be zinged for trying to do the right thing.  All of these parties encourage people in trouble to ask for help before their homes go into foreclosure, but the credit score drop is a disincentive to many.

However, for most who seek help, this is an irrelevant side effect, especially if they are already behind on payments and close to losing their home. It’s like telling people on the sinking Titanic that they will be billed more if they chose a red lifeboat instead of a blue one.  If you’re drowning, you might prefer the blue one, however, if the red one is the only one in sight, paying more for red seems pretty reasonable.

Remedies such as loan modification, bankruptcy, and even short sale or foreclosure are last resort remedies that you might choose when you have no other options.  In a perfect world, you would be able to pay your bills without needing help.  In the real world, if you need help, your best option is to use the help accessible to you.  The time to ask is - as soon as you need it.  There may be a credit score impact with any remedy, but the impact is less the earlier you ask.

Express Homebuyers will buy your home for cash.  Call us today at 1-877-804-5252 or check out our helpful website.  We will make you an offer on your first call, provide free reports to help you make your selling decision, and even offer options to chat with one of our helpful consultants.

Times are tough, and some homeowners feel defeated by impending foreclosure.  Some try to work out a solution with their bank.  Others try to do a short sale.  Terry Hoskins of Moscow, OH, tried another approach.  After years of arguing with the River Hills Bank of New Richmond, OH, as well as the IRS, Hoskins bulldozed his house rather than let the bank take it away.

He had paid over $200,000 on his $350,000 home, as well as numerous attorney fees and thought the threats from the bank and IRS were unfair.  Rather than being victimized, he powered up the dozer.   Hoskins, also in trouble with his commercial property that he built from the ground up, threatens to leave the land in the same barren condition he found it.

Fearing foreclosure?  Don’t take drastic action!  Help is available in DC. The Department of Housing and Community Development or the District of Columbia Housing Finance Agency can provide assistance if you face these drastic circumstances.

Express Homebuyers buys homes from homeowners.  A simple call could yield you a $2,500 advance and a way out of your housing debt in about two weeks.  Contact us today for all the details.

This is encouraging some homeowners to strategically default on their loan before they are even delinquent. Knowing that delinquency might affect their ability to apply for a new loan or even to get a decent rental, they are getting their next step in place before they make a move.  Even if they can pay the loan, the decision to strategically default may be based on the math of it all.  They determine that over the life of the loan, they will pay 10’s of thousands of dollars more for their property than it is worth.  They know their credit score will take a hit, but they anticipate that by the time their credit rebounds they will have saved a bundle.

This is a new variation on what some homeowners do out of frustration: walk away from a house they are delinquent on and mail the keys back to the bank.  Banks hate this “jingle mail.”  While it may seemingly solve a problem for someone already deep in debt, they may well receive a double whammy: they now have bad credit AND a bank may be coming after them.  The bank may come after the first group too, but the strategic defaulters are betting this won’t happen.

According to a new study by credit bureau Experian and Oliver Wyman Consulting, twice the number of people who did this in 2007 did so in 2008.  Based on their evaluation of 24 million credit files, strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and nosedived since 2006.  The study found a 68% increase in strategic defaults in California, compared to a 9% increase elsewhere.

Not surprisingly, banks are less enthusiastic about strategic defaulters than regular walkways.  The major credit bureaus are developing tools to identify strategic defaulters and refuse loan modifications to this group, as they are likely to strategically default even after the modification.

All of this lends some background to what can be a more personal problem: the need to sell your house, fast. If that is the case, contact us at Express Homebuyers. We buy houses, no matter what the condition. We’ll give you a fair shake and you can sell your house for cash, fast. Check out our website for some useful secrets to selling your home fast, then give us a call at 1-877-804-5252.

Specifically, the researchers found that if a payment is lowered by 25% because the interest rate was cut, the homeowner is 11% less likely to default.  If the 25% deduction is due to reducing the principle while cutting the interest a little, the homeowner is 27% less likely to default within one year.  Reducing the principle doubles the potential rate of success.

Lenders and the investors who bought the loans are reluctant to lower the principle, even though the dollars and cents of foreclosure are clear: it costs more to foreclose and then maintain a bank-owned home until sold than to cut their losses by making a deal with the home owner.

Homeowners are acutely aware that the value of their home has dropped in comparison to the loan value.  Nationwide, at least 23% of homeowners had negative equity in their homes by the third quarter of 2009.  The Fed Study found that the more “underwater” a borrower is, the more likely he is to default.  When their loan–to-value (LTV) is 115%, homeowners owe 15% more than the home is worth and are 51% more likely to default on a modified loan.  When they have positive equity, they are more likely to keep the terms of the modification.

It comes down to incentive.  If people are paying on a deeply underwater home, they have less financial stake in paying on the loan than those who would lose their own money if they defaulted.  No one wants a foreclosure, but those with positive LTV would lose their equity along with the home in case of default and ultimate foreclosure.

Some analysts think the study could result in a rethinking of federal housing rescue plans.  Currently, the Home Affordable Modification Program (HAMP) stresses lowering interest and lengthening the mortgage but does not push for principle reduction.  If lessening the principle to get the home more in line with current market values is the key to successful mortgage modification, existing programs are doomed to failure or at least will have minimal long term effectiveness.  The program must encourage people to make the choice to pay rather than default.  Hopefully, future modifications of HAMP will tackle the thorny issue of underwater mortgage head on.

Facing the potential of having to sell your home? Express Homebuyers will buy your home for cash and have your deal wrapped up in two weeks .  Check our website for some useful secrets on selling your house fast. Then give us a call at 1-877-804-5252. We buy houses as a business. We pay cash, and you can sell your house fast to avoid the hassle of loan modification.

New groups of people are affected. The mortgage crisis started when sub-prime mortgages crashed, but now prime borrowers are increasing as unemployment spreads.  Currently, unemployment is at 10% nationwide.

There are regional differences. Nevada, Florida, Arizona, and California, where the real estate boom was the greatest, still have skyrocketing foreclosure rates, and represent 42% of all foreclosures.  Florida alone has a 25% rate.

There is a Shadow Inventory. Large stocks of foreclosed homes – up to six million of them -have yet to be put on the market by banks.  Considering that foreclosures are still adding to the numbers, it will be several years before housing inventories are stable.

Some rescue programs are mis-targeted. Nearly 700,000 borrowers are in trial loan modification programs as a result of the Making Home Affordable program, but many thousands who are unemployed or are in negative situations don’t qualify.  The programs require that you have enough income to pay a modified mortgage and apply only to people whose “under water status “ does not exceed 125% of the loan value.

Some programs fail (and may be doomed to). The rescue programs don’t go far enough.  The payments after modification are still too high for many people, so they default later rather than sooner.  Also, the modification programs often lower interest and lengthen the time but do not decrease the principle.  People are left with the sense they are paying longer for an overpriced house.

Some well-intentioned programs may elongate the problem. Current programs that keep homeowners in their homes as renters once they surrender their deeds may be creative and compassionate, but also may delay the inevitable: the home must be sold at a later date.

Express Homebuyers can buy your home for cash.  Check our list of frequently asked questions to see how this can help you, and then call 877-804-3252 to get started.

• While 4 million people could be helped, only 825,000 have been accepted into the program so far.
• Only 66,000 (7%) homeowners in the program have moved into permanent loan modifications.
• On average, homeowners save about $500 per month when their payments are reduced to a maximum of 31% of their income.
• Of the homeowners aided by program to date, 52% needed assistance because they lost income; 11% claimed too much non-mortgage debt; and 6% were unemployed.
• About 50,000 (6%) have been dropped from the program because they did not qualify, provide required documentation, or make all of their payments.
• 25% of participating homeowners have failed to make all of their payments while some have made none at all.

The statistics provided are interesting food for thought. Why aren’t more people applying?  Why aren’t more accepted?  Why aren’t more moving to permanent status?  Why are so many defaulting?

There is plenty of fault to go around.

Banks don’t really want to modify loans; when they do, they seldom modify the principle.  The modifications are doomed to fail for many people, especially if they are underwater and people are still paying big notes on homes that have lost their value.

The fact that some people aren’t paying their loans indicates that the modification wasn’t enough for them, their finances got worse after the modification – i.e., they lost their job, or the home they tried to stay is was too expensive for them.  Perhaps the program guidelines need to be changed or counseling needs to weed out those likely to fail and help them find new housing.

 Express Homebuyers can buy your home for cash to prevent foreclosure.  Check our list of frequently asked questions to see how this can help you, and then call 877-804-3252 to get started.

Not so fast. A growing trend around the country is for the bank to foreclosure but not take possession of the property.  Banks are now walking away from homes they own and taking no steps to evict the former owners.  This means people can keep living there, basically rent free until the bank shows up to claim their property.  When the house is worth less than the cost of foreclosing, banks basically have little or no value to return to their investors.  They may not complete the foreclosure.

Having access to a free house sounds like a great deal, but “free” does not mean “trouble free.” You do not get a formal notice from the bank that says “We give up, the house is yours.”  Rather, they just walk away, leaving you in a state of uncertainly as to if and when they will take over the property.  In the future the lender may restart the foreclosure; unless the homeowners have been squirreling away mortgage payments in the interim, they may have to go through the process again and ultimately be evicted.  If the bank sells the loan to a collection agency, suddenly, you may be harassed for the money.

With a lien on the house, you won’t be able to sell it, so you can’t really move on. With the title still in your name, the city can hold you responsible for the taxes, as well as code violations and upkeep – even if you move out.  The city could take the house or hold you liable for violations.

What should you do if the bank walks away?  You may temporarily not have to pay rent, but your goal is to resolve the situation. These days, even some lawyers are scratching their heads about how to resolve the legal issues that result from bank walkaways. Your options?  Here are a few:

• Stay there, but try to put your mortgage payments in an escrow account.  You can use this as sign of good faith if the bank later tries to foreclose and you want to retain the home.  In the worse case, you will have some money built up to get you settled elsewhere.
• Regardless of whether you want to stay or go, stay in touch with bank of loan servicer to get an inkling of what is happening.
• Keep trying to work with the bank to see if you can get a loan modification or short sale.  Make sure you put communication in writing and note the date and name of anyone you speak to, preferably in the presence of a witness.
• Think about bankruptcy, which will stop the foreclosure.
• Get help from a HUD approved housing counselor or from a lawyer.  Even if you no longer want the property, you need help bringing the situation to a close.

If you find yourself heading for foreclosure, the time to act is now.  There is free help available to help you ponder your options, especially if you would like to stay in the home.  

Express Homebuyers can buy your house for cash.  Check our list of frequently asked questions to see how this can help you, and then call 877-804-3252 to get started.

If you could get that knock on the door soon, Express Homebuyers offers an alternative.  We will buy your home and guarantee completion of the process within a couple weeks.  We tell you up front what we will pay; if you agree, you are on the way to a quick resolution.  We even offer you a $2,500 upfront advance you can use to begin your fresh start.  Call us at 1-877-804-5252 or check out our Express Homebuyers website for more details.

President Obama promised that nearly 4 million homeowners would be helped through modification, but the initial efforts went slowly as lenders moved slowly.  In July, the President and his staff called lender representatives to Washington and told them to pick up the pace.  The most recent report released December 10 indicated that the program is not only on target but ahead of schedule in terms of people who are at some point in the process.

• 728,000 modifications have been made – 25,318 of them in the Washington, DC metro area
• Borrowers with modified loans are saving an average of $550 per month
• Only 31,382 borrowers have moved from the trial phase of the program to the permanent phase
• So far, most borrowers are keeping up with their payments

The Administration met with lenders and loans servicers in Washington this week to ascertain if they are doing all they can to make the trial conversions permanent.  Meanwhile, the push is on for people in their trial period to sign the paperwork to make the modification permanent.

As noted by Chief of Treasury’s Homeownership Preservation Office (HPO) Phyllis Caldwell, the report proves that “struggling homeowners across the country continue to receive immediate relief in the form of reduced monthly payments and a second chance to stay in their homes.”

These facts contradict a study by a watchdog group that came out the same day as the government report.  The study claims only 10,000 permanent modifications have been completed and echoes Treasury department fears that 40% of people with modified home loans will re-default within 5 years.

For many homeowners, loan modification is a solution that can work long term if the reduction is substantial enough and if the other expenses associated with the home fit within the budget.  For others, who have a home too pricey for them, other debt, or a faltering job, the process may only prolong the agony before they either lose the home or make the decision to move on.

If you are debating whether you should modify your loan or go another route, Express Homebuyers offers an alternative.  We will buy your home for cash and guarantee completion of the process within a couple weeks.  We tell you up front what we will pay; if you agree, you are on the way to a quick resolution.  We even offer you a $2,500 upfront advance so you can plan your fresh start.  Call us at 1-877-804-5252 or check out our Express Homebuyers website for more details.

Silver Lining?

Although you have a lot of yourself tied up in your home, this situation affords an opportunity to reevaluate your priorities. When it comes right down to it, is a building worth all the aggravation it is causing you and your family?  Is it worth risking your family for?

Sometimes people hate to let go of things because they don’t think that same chance will ever come their way again.  With a home, that is definitely not true.  Depending on how the situation plays out, you will be able to buy a home within three years (maximum) if you take the time to rebuild your finances.

You may have heard that going to a housing counselor is what you need to do when you’re in trouble.  The purpose is finding a HUD-approved counselor is partly to explore ways to save the home, but these people can also lead you to resources to help you rebuild your credit, find rental housing, and maybe even find a job, if that that is part of the reason your finances have become unglued.  Not every solution to your financial problems will result in your keeping your home, but there are solutions that will help you overcome your current circumstances with dignity and assure a better tomorrow.

Sell Your House, Fast.

One solution you may not know about is selling your home for cash. Admittedly only one of many options, but it is a great way to sell your house fast.  There are some scammers out there who promise to do this, but a legitimate company that can alleviate your obligations by purchasing your home could be a way out for you without having to suffer some of the more drastic consequences.

Express Homebuyers has been buying properties from distressed homeowners in the Washington, DC metropolitan area since 2003.  We are accredited by the Better Business Bureau (BBB) and Members of the Who’s Who Register. Only companies that adhere to the highest standards for ethical business practices can be affiliated with organizations like these. Check us out at the Better Business Bureau.

Regardless of whether you are late a few payments, have no equity, or need a lot of repairs, we can help you.  Wondering how this works?  Check out our Frequently Asked Questions for an overview of program, then call us today at 1-(877) 907-3232 and get your life back.

Being in this situation is not what you anticipated when you scraped and saved for your home. However, if you can adopt the philosophy that homes and material things are replaceable, you can get through the situation and aim for a fresh start.  Short sales, foreclosure, or  bankruptcy can provide this. What you should aim for is the solution that has the smallest long term impact on your credit score and the greatest chance for you to move onto the next step with dignity.

Preserving your credit score is important. Not only is a good credit score necessary to get future credit and get it at a decent rate, it may impact your ability to rent or buy a house, get insurance, and even get a job. If you fall on hard times, you will take an inevitable hit.  Your concern should be with preserving your score as best you can. The means that in order of the least damage to your credit, it is short sale, foreclosure, and bankruptcy.

Short sale: If your home’s value is not enough to pay off the mortgage, you could ask your lender to authorize a short sale where you can sell the home for less than you owe.  This approach saves the lender time and money compared to a foreclosure and allows you have more time to plan your nest move as the process takes a while. You will lose 80 to 100 points on your credit request, but within 18 months the impact on your score should lessen.

Foreclosure: When the bank takes your home, you lose 200 to 300 points on score and can’t buy another home for at least three years.  Given the large numbers of foreclosures these days, foreclosure might have a relatively small social stigma and economic impact over time.

Bankruptcy: Bankruptcy will remove your debts or allow you to repay them over time, depending on whether you file Chapter 7 or 13 bankruptcy.  The number of points you lose depends on what your credit score was before you filed, but the event will stay on your record from 7 to 10 years. Despite the effect on your credit rating, this may still be the best choice if you are burdened down with a lot of other debts besides your mortgage.

Any of these methods can offer a fresh start to you if you are in trouble.  If you want to sell your home now, Express Home Buyers can offer exciting alternatives. Whether you are in financial trouble, face foreclosure, have a property that needs a lot of work, or have an inherited house, we can sell your house fast. Because with us, it’s Guaranteed2Sell.

Happy New Year!

It may not seem the best time to continue our discussion about avoiding foreclosure, but let’s face it, more of us than ever before are reaching what seems to be the point of no return. However, as we mentioned last time, you can take very positive steps to avoid foreclosure without sacrificing your credit or, finally, your ability to buy a home.

We discussed bankruptcy as your first option in our last blog. Now let’s look at another option that just might work for you as well.

Option 2: Make Up Your Payments in a Lump Sum or Installments.

You might be surprised at how much your lender wants to work with you to avoid foreclosure. You see, they stand to lose as much, if not more than you if they have to sell your property at auction. For them, it’s not a very good roll of the dice.

The truth is, they are very willing to work with you. The most common reason lenders don’t work with homeowners facing foreclosure is that the homeowner never asks before it’s too late.

Let’s look at some options.

If you are able to prove to the lender that you can make the payments you have missed plus make your current payments over a period of time (up to 24 months), it may be possible to keep your home. This option requires significant negotiation and discussions with your lender, but look on the up side. You get to keep your home. It’s worth it, don’t you think?

Keep in mind that you will be charged late fees, modification fees and other fees once an agreement is reached. Also, you may be subject to new, higher payments once you’ve renegotiated the terms of your loan. But if you are in the middle of a short-term cash crunch – layoff, hospital bills, emergency – this might be your best option.

If the cash crunch you are in is long term, this option simply may not be possible. the only way you can find out is by contacting your lender. Before you seek this option, be sure you have the cash on hand to pay the up-front fees as well as the patience and persistence to work with the lender.

The upside, you may be able to keep your house. The downside is that this option can be expensive, not to mention time consuming.

Obviously, we’re in the home buying business where we buy houses, fast. We’ll discuss that option in a later post. What is important today is to understand that you can work with your lender to avoid foreclosure. A counter-intuitive statistic is that most financially-pressed families pay off their credit card payments and let their mortgage payments lapse. Yet, when you think about it, what’s more important, your home or your credit rating?

Talk to your lender, today. See if this option works for you. If not, stay tuned.

It is a tough time. More people today are facing financial decisions they never thought they’d face. An unfortunate, real situation for many of us can be summed up in a single devastating word: Foreclosure. Figuring out how to pay your mortgage much less the rest of your bills can be overwhelming. Whatever the reason, whether you are one or five mortgage payments behind, foreclosure is looming, and you may feel there is no way out.

Don’t underestimate the seriousness of your situation: foreclosure can permanently damage your credit and prevent you from ever being able to buy a home again. You need to exercise one of your options before the bank forecloses on your home and jeopardizes your chances of owning another home in the future!

Option One: Declare Bankruptcy

Declaring bankruptcy is viable option for avoiding foreclosure. But use it only as a last resort. Although you can exclude your home from a bankruptcy filing, you should only pursue it if you know that you will be able to keep up with your future mortgage payments. Otherwise you’re just postponing the inevitable, and the longer you wait, the less money you will walk away with from your property.

Declaring bankruptcy can be costly—legal fees and negotiated settlements can strip you of much needed cash during the process of filing. When declaring bankruptcy you will have the option to declare either Chapter 7, 11 or 13 bankruptcy. These refer to different parts of the bankruptcy law which relate to your degree of debt and your need to renegotiate with lenders. Your bankruptcy attorney will help you determine whether you can truly walk away from all your debts, or only some of them. However, be warned that because you can only declare bankruptcy every so many years, certain future debts might not be eligible even for bankruptcy protection.

So, is it for you? Many homeowners find that declaring bankruptcy is not an “easy way out” and does not eventually save them from foreclosure. A bankruptcy will be reported on your credit report for up to 10 years, depending on how you file. The bankruptcy will also be reported in the financial section of the newspaper—it’s a requirement from the bankruptcy court. By declaring bankruptcy, it will be very difficult to get a loan in the future for a car, home or education, or even getting a credit card.

Before you exercise the bankruptcy option, you might ask, “How can I sell my home fast?” or “How can I sell my house for cash?” Consider selling to one of the many companies that buy houses like us, Express Homebuyers. It’s a viable alternative that can prevent bankruptcy, salvage your credit, and prevent foreclosure.