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Expanded HARP Mortgage Refinance Option-Available Soon!

Today, the government expanded the HARP program and qualifications. Attached is the news release. Qualifying for a new loan to lower your rate may now be a possibility even if you are upside down-ie underwater on your loan. Terms/conditions always apply-see the release and call me if you think you fit the parameters. We can take it from there.

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No Gain or Loss Needs to Be Recognized in Securities Loan Transaction for Short Sales

The Tax Court recently reiterated its position with respect to non-recognition of the loan of securities by one to another person, such as a broker or investor engaging in a short sale. The Tax Court rules that such a loan does not constitute a “sale” for which capital gains would otherwise be realized. The Court set forth the terms of the loan agreement that must be agreed to by the parties under Section 1058(b), including (1) the return to the owner of identical securities that were transferred to the borrower, (2) payments must be made to the owner of the shares equal to all interest, dividends and other distributions which the owner of the securities would otherwise be entitled to receive, if any, during the loan period, (3) the owner’s risk of loss or opportunity for gain remains the same, and (4) the agreement complies with all requirements under the Tax Regulations. See Henry Samueli et al v. C.I.R., 132 T.C. No. 4 (2011).

Under the proposed regulations, the payments compensating the owner of the securities for interest, dividends and any other distributions are treated as “a fee for the temporary use of property” and not as interest or dividend income, except for those instances where the borrower defaults under the loan agreement or fails to deliver any consideration to the lender of the securities. In these limited circumstances, gain or loss must be recognized by the lender at the time of the borrower’s default.

This article was written by a friend of mine, Steve Katkov. Steve Katkov is Senior Vice President and General Counsel for Commercial Partners Exchange Company (CPEC), a national qualified intermediary facilitating tax-deferred exchanges of both real and personal property pursuant to Section 1031 of the Internal Revenue Code. He has been involved in thousands of 1031 exchanges of real and personal property, including complex reverse and improvement exchanges. His client list includes Fortune 100® companies and some of the nation’s largest privately held corporations. Prior to joining CPEC, Steve served for more than six years as a Vice President/Regional Manager for First American Exchange Co. (a subsidiary of First American Title Ins. Co.).

Steve Katkov, SVP (612) 419-6118
Commercial Partners Exchange Co.
1300 U.S. Bank Plaza
220 South Sixth Street
Minneapolis, MN 55402

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Insured Conventional Loan Vs FHA-Which Is Better

There are many factors that go into a loan decision-credit scores, down payment, debt ratios, etc. One big question is whether you should consider buying a home with an insured conventional loan using 5% down or applying for an FHA loan with 3.5% down. The information below might make that decision easier. In fact, if FHA continues to raise the cost of their monthly mortgage insurance-known as MIP-the decision may start to favor conventional loans with PMI-private mortgage insurance. Remember, everyone’s situation is different. This information just gives you one more way to look at financing your purchase.

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Gifts and Grants can be considered towards borrowers funds on certain 3% down conventional loans

Yes, you read that right. I just got an email today from a leading mortgage insurance company that is willing to underwrite this loan. You will need at 740 or better score. But, what an opportunity. In many ways, this is like FHA, but with a little higher credit threshold. The KEY difference, besides credit score, is the lack of an upfront MI (mortgage insurance) premium and as well as a smaller required monthly premium. This product could be a game changer for the MI company and conventional loans.

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4 Tips to Determine How Much Mortgage You Can Afford

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Here are six surefire ways you can get your finances in order before you buy a home.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability
As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment
How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.
The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt
Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.

Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide
The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

G.M. Filisko is an attorney and award-winning writer who’s owned her own home for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

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Rebuilding Credit To Get A Mortgage

Often, especially in this market due to the recession, we find potential home buyers who have had a life event or “bump in the road” that affects their ability to obtain a new loan. If you want to buy a home, you will have to have a certain number of reporting trade lines and for certain length of time. MOST mortgage programs require 3-5 trade lines and a minimum of two years of reporting. The other criteria is the actual credit score-which generally has to be 620, 640 or even 660 as it is all lender dependent. A manual underwriting where they use alternative credit such as rent payments, cell phone bill, utility bills, and the cable bill might be able to be used-but only with a few certain programs and lenders. So, the best bet is to re-establish credit as quickly as possible. HOW ABOUT NOW!! Don’t wait-it will only extend the time until you are going to be eligible. I have put together a list of resources that might be helpful. This list is only a starting place for your research. If you find another good resource please post it in the comments below so that the list can be expanded upon.

TOP IDEAS FOR CREDIT RE.doc

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Top Seven Tips For Home Buyers

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Timeline For Foreclosure – All 50 States

By John C Hanlin

The #1 thing that most real estate investors and homeowners facing foreclosure want to know is: “what is the timeline for foreclosure?” In other words: “how long does it take?” The answer is that the mortgage foreclosure process and timeline varies from state to state. This article provides the information and resources that you will need to find out the foreclosure laws, procedures and timelines for all 50 states.

As mentioned, each state will typically have a different set of rules and a different timeline for foreclosure.

• 20 states utilize only “Judicial” Foreclosures.
• 5 states and the District of Columbia utilize only “Non-Judicial” Foreclosures.
• 25 states utilize both Judicial and Non-Judicial Foreclosures.##

## Of the 25 states utilizing both types of foreclosure, Non-Judicial Foreclosures are more common. In fact, Non-Judicial Foreclosure is the most commonly used form of foreclosure nationally.

I. JUDICIAL vs. NON-JUDICIAL FORECLOSURES:

The primary difference between the two classes of foreclosure is the involvement or non-involvement of the court system. As you might have guessed, Judicial Foreclosures are processed through the courts. Non-Judicial Foreclosures are not.

Regardless of the type used, the timeline for foreclosure is always preceded by a borrower defaulting on their mortgage payments. Most lenders typically won’t threaten homeowners with foreclosure until two or three payments have been missed. However, once the lender concludes that the mortgage is in default and the homeowner is not going to catch up on their overdue payments, a legal filing is made by the lender and the timeline for foreclosure begins.

A. JUDICIAL FORECLOSURES:

In a Judicial Foreclosure, the lender files a formal complaint with the court and records a legal notice of “Lis Pendens”. The complaint must state the details of the debt and why the lender should be allowed to foreclose on the property. The Lis Pendens gives public notice that the house is the subject of foreclosure proceedings and implements the legal timeline for foreclosure.

If the court rules that the debt is legitimate and in default, it will send a notice to the homeowner demanding payment of the amount owed (plus penalties and foreclosure costs). The borrower is typically given 30 days to respond and satisfy the debt. If they do not, the court will tender a judgement in favor of the lender, instructing that the home will be sold at a “Sheriff’s Sale” auction.

After the judgement is entered, in most states that utilize Judicial Foreclosures, the homewner has about 90 days prior to the Sheriff’s Sale to pay the entire amount owed and stop the mortgage foreclosure process. There are other alternatives that could stop the timeline for foreclosure during this 90 day period:

• Negotiate a “Forbearance Agreement” with the lender that revises the loan terms to the satisfaction of both parties. (Most lenders do not want to foreclose because it can cost them a lot of money.)
• Sell the home.
• Refinance the loan.
• Declare bankruptcy.

If the mortgage foreclosure process isn’t stopped, the property goes to a “Sheriff’s Sale” where it is auctioned off to the highest bidder and extinguishes all rights of ownership of the defaulting homeowner. If noone purchases the property at the auction, the title to the home reverts to the lender and it becomes what is known as an “REO Property”. This stands for “Real Estate Owned” (by the bank or lender).

How long does the Judicial Foreclosure process take?

This is almost impossible to predict. The judicial timeline for foreclosure is entirely driven by the court schedule and literally “at the mercy of the court”. However, most experts will agree that Judicial Foreclosures can often take more than a year to complete.

Important Note: Even after a home has been sold at the Sheriff’s Sale, some states will allow an opportunity for the homeowner to regain ownership of their home. This is known as a “Redemption Period” and is a period of time after the mortgage foreclosure process has been completed. Even though the property now will have a new owner, the former homeowner can still reclaim title to their home by paying off the full amount of their original home mortgage plus penalties and foreclosure costs.

B. NON-JUDICIAL FORECLOSURES:

Also known as “Power of Sale” Foreclosures, Non-Judicial Foreclosures are conducted outside of the court system by either a third party “Trustee” or an attorney. This mortgage foreclosure process is used when a “power of sale clause” exists in a mortgage or deed of trust. This clause states that the borrower agrees to the sale of their property to pay off the balance of their home loan in the event of a default.

As with Judicial Foreclosures, most lenders will not begin the Non-Judicial Foreclosure process until several payments have been missed and they are convinced that the homeowner is not going to catch up on their overdue payments. However, once the lender determines the borrower to be in default, a legal filing is made by the lender and the timeline for foreclosure will begin. This filing is known as a “Notice of Default” (NOD).

After the NOD is filed, the homeowner typically has a 90 day “Reinstatement Period” to catch up on missed payments and stop the foreclosure before the lender can take further action. There are other alternatives that could stop the timeline for foreclosure during the Reinstatement Period:

• Negotiate a “Forbearance Agreement” with the lender that revises the loan terms to the satisfaction of both parties. (Most lenders do not want to foreclose because it can cost them a lot of money.)
• Sell the home.
• Refinance the loan.
• Declare bankruptcy.

If the borrower remains in default at the end of the Reinstatement Period, a “Notice of Trustee’s Sale” will be filed with a date and time posted for an auction sale of the property. After the Notice of Trustee’s Sale is recorded, the homeowner typically has another 21 days before the auction date. During this period, the borrower can still stop the timeline for foreclosure with any one of the alternatives mentioned above in the Reinstatement Period.

If the mortgage foreclosure process isn’t stopped, the property goes to a “Trustee’s Sale” where it is auctioned off to the highest bidder and extinguishes all rights of ownership of the defaulting homeowner. If noone purchases the property at the auction, the title to the home reverts to the lender and it becomes what is known as an “REO Property”. This stands for “Real Estate Owned” (by the bank or lender).

Important Note: Similar to Judicial Foreclosures, after a home has been sold at the Trustee’s Sale, some states will allow an opportunity for the homeowner to regain ownership of their home. This is known as a “Redemption Period” and is a period of time after the mortgage foreclosure process has been completed. Even though the property now will have a new owner, the former homeowner can still reclaim title to their home by paying off the full amount of their original home mortgage plus penalties and foreclosure costs.

THE BOTTOM LINE:

Regardless of the mortgage foreclosure process used, it is very important to know the laws and procedures for your particular state. To help with that, here is a link to the Foreclosure Process: All States.

ABOUT THE AUTHOR:

The author, John Hanlin, recently published the HOT NEW E-BOOK: “The LazyMan’s Guide to Understanding Foreclosures & REO Property Investment”. Click here for info.

Mr. Hanlin is an Independent Investors’ Consultant who provides FREE investment advice on his website:
http://www.JohnHanlin.com where you can sign up for a copy of his FREE Special Report: “The Safest High Yield Investments You Can Make Today”.

You have full permission to reprint this article provided it is kept unchanged and all author information above remains intact.

Article Source: http://EzineArticles.com/?expert=John_C_Hanlin
http://EzineArticles.com/?Timeline-For-Foreclosure—All-50-States&id=3070758

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Owner Financing – The Foreclosure Process

By Craig Meriwether

One of the great parts of the owner finance home sale is the opportunity to work with the buyer in the case of financial problems. By creating a solution that works for both parties a home owner is more than likely to stay in the house and the loan holder will continue to receive monthly payments. If a solution cannot be created then unfortunately foreclosure might be the only option to take. This article will present a look and some of the different ways foreclosures can be handled.

In some states, the beneficiary can choose one of two methods to foreclose judicial or non-judicial. In a judicial foreclosure, the beneficiary files a lawsuit against the trustor in Superior Court to foreclose on the property. The case is then set for trial. If the court rules in favor of the beneficiary, the property will be ordered sold at a public sale. In most instances, however, it is a non-judicial foreclosure. In a non-judicial foreclosure, the court system is not involved. To foreclose non-judicially, the deed of trust or mortgage must contain a power of sale clause. The power of sale clause gives the trustee the right to begin foreclosure without going to court. To include a power of sale clause does not require a specific form or language.

If, on the other hand, the security instrument does not contain a power of sale provision, judicial foreclosure is the beneficiary’s only way to obtain the property. Most conventional deeds of trust say “with the power of sale”.

Judicial and non-judicial foreclosures differ in many ways. The foreclosure method selected by the beneficiary has significant consequences for the trustor.

Non judicial foreclosure is relatively fast, as this method does not involve the court system. In most instances, non-judicial foreclosure takes, at minimum, about four months after the trustor has failed to meet the obligation or defaulted on the loan. Judicial foreclosure, on the other hand, may take up to several years.

Non judicial foreclosure is generally less costly than judicial foreclosure. In a non-judicial foreclosure, the trustee’s and attorney’s fees are largely specified by law. In a judicial foreclosure, however, there are generally no legal limits for attorney’s fees. As a result, the trustor may be liable for significant legal expenses.

Another major difference between the two foreclosure methods is the beneficiary’s right to a deficiency judgment. A deficiency judgment is a court order stating that the trustor still owes money to the beneficiary if the proceeds from the foreclosure sale are not sufficient to pay the balance of the debt.

Some state laws do not allow a deficiency judgment in a non-judicial foreclosure on residential purchase money loans. A residential purchase money loan is one in which loan proceeds are used to purchase the property. Furthermore, state laws do not allow deficiency judgments against the residential trustor where the loan was made by the seller of the property or by a third party lender (often a financial institution) on a four-unit or less residential property that is the principal residence of the trustor. If the beneficiary judicially forecloses on a non-purchase money residential loan, a deficiency judgment may be obtained against the trustor.

Non-judicial and judicial foreclosures also differ with regard to the trustor’s right of redemption after the foreclosure sale. This is the trustor’s right to reclaim the foreclosure property. In a non-judicial foreclosure, the sale of the property at the trustee’s sale is an irrevocable final sale, and the trustor does not have the right to redeem or reclaim the property after the sale. Judicial sales, however, are subject to redemption by the trustor.

This summary of the major differences between non-judicial and judicial foreclosure shows the advantages of non-judicial foreclosure for the beneficiary. The non-judicial foreclosure is timely, economical, non subject to redemption, and may command a higher sales price. In addition, it is unlikely that the beneficiary would recover any losses through a deficiency judgment, as the trustor could not make the loan payments in the first place. Because of these advantages, beneficiaries typically prefer to foreclose non-judicially. Beneficiaries might foreclose judicially when they see an opportunity to recover any losses through a deficiency judgment.

The following two sections give detailed information on each of the foreclosure methods.

Non-Judicial Foreclosure

This section describes the major procedural requirements of non-judicial foreclosure, discusses the trustor’s reinstatement and redemption rights, reviews legal provisions for trustee’s fees and summarizes special legal provisions affecting foreclosures in many states.

Many states allow the beneficiary of a deed of trust containing the power of sale provision to foreclose non-judicially after the trustor has defaulted on one or more contractual obligations. In case of default, the beneficiary may order the trustee to initiate foreclosure.

Notice of Default

Foreclosure begins when the beneficiary notifies the trustee that the trustor has defaulted on any obligations stated in the promissory note and deed of trust. The beneficiary gives the trustee information concerning the condition of the debt such as the amount of the unpaid balance and due dates. Upon receipt of this information, the trustee prepares the Notice of Default.

The Notice of Default must be recorded in the office of the recorder of the county where the property is located. If the deed of trust encumbers property located in more than one county, the Notice of Default should be recorded in the other counties as well.

The trustee must mail a copy of the Notice of Default to the trustor and to each person requesting notice within ten days of recording the notice. The law specifies additional notification requirements under certain circumstances. The Notice of Default must be published weekly for four weeks in a newspaper or personally be served on the Trustor, if the trustor has not requested to be notified of its recordation of the notice

Trustor’s should always notify the beneficiary and the trustee of any address changes to ensure prompt receipt of any correspondence from the beneficiary or trustee.

Before January 1, 1986, the trustor and beneficiaries under subordinate deeds of trust were given three months from the recordation of the Notice of Default to cure the default. An amendment to the law extended the expiration of the reinstatement period to five business days before the scheduled trustee’s sale. If the trustee’s sale is postponed, the reinstatement period is extended to five business days before the new date of the sale.

At any time during the reinstatement period, the trustor may stop the default by paying the beneficiary all sums of money due on the loan up to that point including additional costs incurred by the beneficiary, and attorney’s or trustee’s fees as specified by law. It is not necessary to repay the entire loan balance.

After reinstatement of the loan, the foreclosure proceeding is discontinued and the trustor resumes making the regular periodic payments.

Notice of Trustee’s Sale

If three months have passed since recording the Notice of Default, and the trustor has not begun to reinstate the loan; the trustee may proceed with the foreclosure by preparing a Notice of Trustee’s Sale.

The Notice of Trustee’s Sale must be recorded in the office of the recorder of the county in which the property is located at least 14 days before the date of the sale. As with the Notice of Default, the Notice of Trustee’s Sale must be mailed to the trustor’s last address actually known to the trustee.

The Notice of Trustee’s Sale also must be published in a newspaper of general circulation in the city, judicial district or county where the property is located. The notice must be published once a week over a 20-day period before the sale.

In addition to mailing and publication, the Notice of Trustee’s Sale must be posted for at least 20 days before the sale at the following locations:

o In at least one public place in the city, judicial district, or county in which the property is to be sold; and

o In a conspicuous place on the property to be sold

Improperly broadcasting the Notice of Trustee’s Sale typically will result in the cancellation and re-notice of the sale.

As mentioned before, the trustor can cure the default during the reinstatement period that runs up to five days before the schedule sale. After the reinstatement period expires, the trustor must pay the entire indebtedness plus foreclosure costs to avoid foreclosure. This is called redemption and only can be done during the five days before the sale. The trustor’s right of redemption ends once bidding at the foreclosure sale starts.

Trustee’s Sale

The trustee or the trustee’s agent must conduct the foreclosure sale at a public auction in the county where the property is located. The sale is to the highest bidder who must pay in cash, cashiers check or cash equivalent as specified in the notice and acceptable to the trustee.

The trustee may postpone the sale at any time before it is completed. The sale may be postponed at the trustee’s discretion, upon instruction by the beneficiary, or upon a written request by the trustor who has the right to request a one-day delay to obtain sufficient cash to pay the debt or bid at the sale. The trustor’s request for postponement must include a statement identifying the source of the funds. The law allows for three postponements. After three postponements, a new notice of sale must be given, except for postponements requested by the trustor or ordered by a court.

After the sale to the highest bidder, the trustee executes and delivers a trustee’s deed to the purchaser. The trustee’s deed conveys title to the purchase free and clear. The issuance of the trustee’s deed terminates the previous trustor’s legal and equitable rights in the property. It should be noted, however, that title to the property is conveyed subject to all senior liens, including liens for property taxes and assessments.

The purchaser of the foreclosed property is entitled to take immediate possession. A trustor who refuses to vacate the property may be legally forced to do so.

Rent and Rental Income

Generally, the trustor occupying the property does not have to pay rent to the beneficiary while in default. If a deed of trust should indicate a rent liability, enforcement of it would be unlikely.

The beneficiary may have a right, however, to any rental income generated by the property during the period of default. In the absence of such a provision in the deed of trust, the beneficiary is generally not entitled to any rental income.

Deficiency Judgment

In General, the law prohibits a deficiency judgment in a non-judicial foreclosure with a power of sale provision. Even if the proceeds from the foreclosure are inadequate to repay the loan, the beneficiary has no other possibility to recover.

Trustee’s Fees

The fees a trustee is entitled to charge the beneficiary or deduct from the proceeds of the sale are prescribed by law. The trustee may charge for costs incurred in recording, mailing, publishing, and posting of Notice of Default and Notice of Trustee’s Sale; the cost of postponing the sale by request of the trustor (not to exceed $50 per postponement) and the cost of a trustee’s sale guarantee. In addition to charging for these actual costs, the law provides for a fee schedule based on the amounts of the unpaid debt.

The legal limitations for trustee’s and attorney’s fees do not apply to attorney’s fees the beneficiary is entitled to recover under special provisions of the deed of trust.

Special Legal Provisions

Special federal and state laws may affect the manner in which the foreclosure is conducted. If the loan is insured or guaranteed by the U. S. Department of Housing and urban Development (HUD! EHA) or the Veterans Administration (VA), certain procedures must be followed. In the case of a VA-guaranteed loan, the trustor may be liable for any deficiency, unless the veteran obtains a release of liability from the VA. California law does not necessarily protect the trustor from liability for a deficiency on a VA guaranteed loan. Federal laws governing the VA loan program take precedence over any conflicting California law. Trustors should contact the VA for details concerning their rights and to learn about specific requirements.

Judicial Foreclosure

Judicial Foreclosure is tried in some state Superior Courts. The beneficiary, upon default of obligation by the trustor, brings a foreclosure lawsuit against the trustor. If successful, the court will issue an order to sell the property at a public sale. The beneficiary must use judicial foreclosure if the security instrument does not contain a power of sale provision. A mortgage or deed of trust containing the power of sale provision may be foreclosed judicially if the beneficiary chooses to do so.

The decision to foreclose judicially or non-judicially is not necessarily final. The beneficiary may discontinue judicial foreclosure at any time and commence non-judicial foreclosure.

Conversely, the beneficiary may abandon non-judicial foreclosure and initiate judicial foreclosure. Beneficiaries sometimes initiate both types of foreclosure simultaneously.

Foreclosure Sale

A court-appointed commissioner or sheriff in the public place must give notice of the sale of the property for 20 days preceding in the date of the sale. This same notice must be published in a newspaper of general circulation weekly for 20 days. The notice also must be sent by certified mail to all defendants at their last known addresses.

At the foreclosure sale, the property must be sold by the auctioneer to the highest bidder who is financially qualified.

Redemption of Property

In a judicial sale, the trustor has the right to redeem or reclaim the property after the foreclosure sale. For a trustor, the right of redemption makes a judicial sale attractive. It should be remembered, however, that a judicial sale might also lead to a deficiency judgment. This possibility does not exist in a non-judicial foreclosure.

Deficiency Judgment

In a judicial foreclosure, the beneficiary has, under certain circumstances, a right to a deficiency judgment. The deficiency judgment is limited to an amount equal to either the difference between the indebtedness and the fair market value of the property, or the indebtedness and the sales price at the foreclosure sale, whichever is less.

Rent and Rental Income

The trustor occupying the disputed property does not have to pay the beneficiary rent while in default. The beneficiary may be entitled, however, to any rental income generated by the property.

After the sale, the trustor retains possession of the property and does not have to pay the beneficiary rent while in default. The beneficiary may be entitled, however, to any rental income generated by the property.

Craig Meriwether is owner of Kula Investments, a company founded you help you get top dollar for you owner financed real estate loan. [http://www.ioubuyer.com]

Article Source: http://EzineArticles.com/?expert=Craig_Meriwether

http://EzineArticles.com/?Owner-Financing—The-Foreclosure-Process&id=2140489

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Learn the different impact between a short sale vs foreclosure

Sometimes, a short sale will be viewed more favorably during underwriting a new loan. A foreclosure will generally have a longer lasting negative affect. This short report give you some things to think about. Of course, things are always subject to change.

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Find out if your home has a Freddie Mac or Fannie Mae Loan

Fannie Mae Lookup
http://www.loanlookup.fanniemae.com/loanlookup

Freddie Mac Loan Lookup
https://www.ww3.freddiemac.com/corporate

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Applying For A Mortgage Loan Modification

Many people are now facing a lot of trouble with their mortgage payments simply because of the type of loan that they signed for. Those with adjustable rate mortgages have watched their payments go up a good bit and sometimes their payments can be double the amount that they used to be. With so many people living paycheck-to-paycheck, especially in this rough economy, there is no room for increased mortgage payments. Other times people are finding that they are falling behind on their mortgage payments due to other hardships such as a temporary loss of work or an illness.

There are options though and the main one, the most beneficial one, is that of the mortgage loan modification. Many mortgage companies have a hardship department or a customer retention department that is able to assist customers in finding the right program or help that they need. Most of the time, it is found that the loan modification is the best route to take. It is simple and pain free and unlike a refinance, there are no extra fees or charges to pay upfront.  The problem for the past due payments will be looked at closely though.

If your past due payments are simply because of the increased mortgage payment because you had an adjustable rate mortgage you may have no problems getting the help you need. You will though have to prove that your income and other expenses support the fact that you can reasonably afford the payments at the amount they used to be. If you are falling behind on the mortgage because you were out of work or were extremely ill, you are generally going to have to show proof that your hardship is now over. All of this is done through the hardship letter that is written by the person seeking out the loan modification.

The hardship letters are what the bank needs in order to justify why they are extending this help to you. They have to make sure that you have a valid reason for falling behind and that you are now able to make timely payments if you were caught up to date and given an easier to afford monthly payment. A sample hardship letter is generally sent to those customers who are applying for a loan modification so that it can be seen how it should be written. If your loan company does not provide you with that you can very well find a sample hardship letter online.

Just make sure that you are being completely honest in your hardship letter. If your hardship is not completely over then you are just going to find yourself in the same situation all over again within a matter of a few months. Many lenders have a limit on how many times a customer can get a loan modification. A lot of banks set their limit at two for the entire course of the loan. This means that you want to be careful when you use these chances so that you are only taking advantage of them when you really need it and when there is no other way out.

In your hardship letter, you are going to want to state your case and make it clear that your hardship was one that was completely out of your control. Basically, the banks want to make sure that you just were not out there spending all of your paychecks at the mall when you should have been paying them. Explain how you would benefit from being brought current and given a lower interest rate. Adjusting the terms of the mortgage could save you a lot of money in the long run. While a lower interest rate means less extra money for the bank, it is a lot better then you not being able to afford making the payments at all.

Keep in mind that while the bank may not be your friend; it is not out to take your home. Mortgage companies are in the business of making money through servicing mortgages, not through owning and selling real estate. The bank does not want your house but will take it if there is no other way to receive money from you. Just make sure that you are not being too relaxed with that information though. You have to be proactive and get started working on your loan modification application as the entire process could take up to sixty days.

You will also need to be prepared to maintain at least one monthly payment during the application process. These payments will prove that you are serious about your house and that you can afford the property, given the chance that the payments are brought back up to date. While you will explain in your hardship letters that there was a solid and explainable reason why you were not able to make your mortgage payments a while back, you have to prove that you can now. You have to be convincing and willing to work with the bank. They are after all holding the future of your home in their hands. Mortgage companies are not required to give you the modification. It is a case-by-case judgment call that they are in complete control of.

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Foreclosure Options: What Happens When You Can’t Make the Payment?

If you are facing a foreclosure, you will often feel as if there is just one option and it is by no means pleasant for you!  With that in mind, there is a good chance that you are feeling stressed, panicked and upset.  While foreclosure on a home that you are living is very much cause for alarm, take a moment to breathe and to really consider your options.  There are many different choices that you may have in front of you, so make sure that you aware of them.  No matter what is going on, or what stage of foreclosure you are in, you’ll find that understanding your choices and what the consequences are can help you a great deal.

Although it will end up costing you money, and although there will still be a drop in your credit rating, you may be interested in seeing if a short sale is available. In a short sale, you  are essentially selling someone the house based on the amount that still needs to be paid.  With a short sale, you’ll find that you are in a place where the lender will agree to discount a loan balance.  There are several circumstances that need to be met before you qualify for a short sale, so take some time and really consider whether this is the right option.  With this option, you will need to enter into communication with a bank’s loss mitigation department.  You will sell the property for the outstanding balance of the loan and then turn the money over to the lender.   There are lots of standards that need to be met if you are in a place where you want a short sale, so make your consultation as soon as you know that this is an option that interests you.  In many cases, banks will only allow this if you are looking at a case of financial hardship and if the market will allow it.

Another option that you have in front of you when you are thinking about what your choices are going to be in the event of facing a foreclosure is the prospect of renting the property out.  If you have family members or friends that you can live with, you may find that setting yourself up as a landlord and renting the property out for the cost of the mortgage can go a long way towards getting you back on track.  This is something that many people are interested in, and if you have any sort of experience working with renters, you’ll find that you are in a terrific place to start looking around. Make sure that you have a place to stay, and always interview your renters before you give them the key, but in many places, this can be something that will get you right back to where you need to be. Renting out the property to reliable people is a good way to make sure that foreclosure is something that you are not going to need to worry about.

Also keep in mind the fact that you can always go to a deed-in-lieu in order to avoid foreclosure.  Although the result is the same, you will find that the process is one that can be quite a bit easier on you.  Essentially, you will find that when you have decided to go with a deed-in-lieu that you will essentially be turning over the property to the lender so that it can be sold and the lender can recoup their loss.  One of the major advantages that this method of sale has for you is that it can immediately from most or all of the debt associated with the defaulted loans.  You will be able to avoid the publicity of a foreclosure and in many ways, you will find that are lot of different ways that this can work in your favor.  While the downside of this arrangement is still that you are going to lose your home, you’ll find that it can get you into another home much more quickly.

As soon as you are afraid that you might be in a situation where a foreclosure is likely, call up your lending institution and start talking with them.  There are many different things that you can do when you are in a place where are facing financial hardship, and you never know when they are going to be able to give you an option that will allow you to avoid foreclosure.  Remember that the more time you give them before you miss a payment, the more options you will have towards saving your home.  This can make all the difference in the world, so get things taken care of as early as you can.

Remember that when you are facing a foreclosure that you still have options in front of you. Contact third party counselors and make sure that you are getting all the choices you have in front of you.  When it comes to a foreclosure, remember that you are never as lost when it comes to options as you might be afraid that you are.  Look into organizations like HOPE NOW and the Homeowners Preservation Foundation.  You may be surprised at the resources that they can provide you with.  The more information that you have when you are looking to go into such a scary time, the more likely it is that you will come out of it unscathed.

If you are in a place where you are looking at getting the right kind of work taken care of, the better your options are going to be.  Consider what is going on and what events in your life are shaping it, and always make sure that your situation is such that you have all the information that you need as soon as you need it.

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Save Your Home From Foreclosure-WORK It Out

When you are in a place where you are facing foreclosure, you may very feel as though the world is very frightening place.  Having your home threatened and feeling as though there is nothing that you can do about is terrifying, but the truth of the matter is that there are many things that you can do.  Don’t let panic and increasingly angry calls from your lender get you down.  Once you have a plan in place and know what is going on, you will find that you are going to feel much better.  Foreclosure is something that should be avoided at all costs, and the truth is that there are methods that can help you get back on track.

First, consider the reinstatement of the existing loan by making up back payments and fees.  This is perhaps the most basic and straightforward way to get out of foreclosure.  Remember that the bank wants to avoid foreclosure nearly as much as you do, given the loss that they take.  When you are able to get back to square one by making up back payments and fees, you’ll find that this is certainly what you want to do.  This is perhaps the ideal solution, but it can be a difficult one to accomplish.  Typically, people can get to this place by making cashing in on assets or even by selling other property.

Another thing that you want to consider is the possibility of modifying the existing loan.  Consult with your bank, or even consider refinancing.  You may find that it is possible to lower the balance, the payment and the interest rate right across the board.  Take some time to do your research, especially if you have a feeling that there might be hard economic and financial times coming.  Take some time and really consider what your options are going to be in this regard.  The sooner you act, the more likely that you and your lender can make this this action come to pass.

When the foreclosure process is looming large and seems inevitable, you’ll find that it is time for you to consider finding out if a forbearance is possible.  A forbearance is typically only possible if you are in a place where financial hardship has been an issue, and if you are going to be able to pay off the debt at a latter time.  A forbearance can be extremely helpful, as it can have you staying in your home without needing to make payments for up to a year.  Within a year’s time, you may have been able to recover from any medical bills that were an issue, or even find a new job if you have been let go.  With a foreclosure, you’ll find that you are in a place where you need to think about reinstated-back payments/fees are added to the back of the loan or even forgiven.

The issue of what do when you are facing a foreclosure is a difficult one to deal with, but the first and most important thing that you need to keep in mind is that the earlier you deal with it, the better.  When things are falling apart, when medical bills are piling up or even when you have lost your job, it can be difficult to know what fire to put out first, but remember that you are dealing with a situation where you need to take care of your housing.  When you see the economic equivalent of an avalanche heading your way, make sure that figuring out what to do with your mortgage is your first priority.

Remember that the lending institution is not a force that simply wants to take your home from you.  In all likelihood, they would rather that you stay right there and pay out on the investment that they have made on you.  Consider what your options are going to be and make sure that you consult them early and often when it comes to possible financial difficulty.  The earlier a problem is caught, the more likely that it can be solved in your favor.  The situation that you have is one that many, many people find themselves in.  Consider what your options are and what you can do when you are looking at getting the results that you need.

Another thing that you should consider is that there are third parties out there who are willing to give you advice and support, and in many cases, they are willing to give it free of charge.  HOPE NOW and the Homeowners Preservation Foundation are just two of the organizations that can do you a great deal of good.   They have toll free numbers and in many cases they can help you put together a plan that will enable you to avoid foreclosure all together.  The Homeowners Preservation Foundation is can even provide HUD approved counselors to get you back on track.  Remember that you have many different options available, and that these are just two of the larger ones.  Also look for help from more local sources.

Keep in mind the fact that foreclosure is not something to be ashamed of.  It is something that happens to thousands of people, and there are solutions out there.  Do not let this problem go until is something overwhelming and difficult to cope with.  Consider what your issues are and what you can do to solve them.  Taking action right now is something that can do you a great deal of good, so ease back and really consider your options.

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10 Reasons why A Distressed Mortgage Situation Occurs

A number of ways exist to end up in a situation that has you facing the loss of your home. Some of these you may have control over such as overwhelming debt other reasons may be completely beyond your control such as the death of a loved one. Whatever the reason it can be easy to get into a situation where you are in default or having difficulty making payments.

One of the biggest and most preventable issues that can cause a distressed mortgage situation is the result of an increase in your mortgage payment. This is usually the result of your mortgage going from a fixed rate to a variable rate on your interest rate. Many people choose an ARM because of the exceptionally low interest rate. However, this interest rate only lasts a short time before it shifts to a higher and highly variable rate. This means that every month the mortgage payment changes as interest rates fluctuate making it difficult to make payments especially if you purchased a home outside your means because of the deal you received on the mortgage. The solution to this is to refinance at a lower fixed rate mortgage.

Losing a job or having a business fail may or may not be preventable but they both can cause issues with your mortgage. Many people do not think what will happen if, when it comes to losing a job or having a business fail. It is important to know what your options are in these situations you may want to request a loan modification, a refinance if this might lower payments or even a forbearance if one if available. You should not wait to act since these situations tend to cause situations where you could lose your home. Being proactive in these situations is usually your best defense against the threat of foreclosure and other problems with your mortgage. It can also help to ensure that your loss of job or failed business does not compound by loss of credit.

Most insurance policies do not cover for everything and even if they cover flood, fire, and natural disaster when it comes time to file the claim it may not be enough to do all the work that is needed. When this happens, you may end up in a serious situation. You could end up with a home that is not livable, that you cannot fix up and cannot sell for what you have in it leaving you in a distressed situation.  Many people do not realize that their coverage may not be enough to replace their home. This is because the majority of people choose options that are more affordable but may offer less coverage than options that provide for the replacement of the home in case of property damage.

The death of someone close to you can be devastating and can often lead you in a financial bind especially if that person was generating the income for or part of the income for your mortgage. This is why death of a spouse, significant other, family member or close friend ranks as some of the top ten reasons for entering into a distressed situation when it comes to a mortgage. It can be difficult paying for funeral costs and trying to make ends meet if you are starting out in the work force or simply shifting from two incomes to a single income.

Another major reason why people end up having issues with their mortgage is illness. This could be simply overwhelming medical bills outside of what insurance will cover or the loss of wages caused by being out of work recovering from an illness or injury.  While this is not always preventable there are usually provisions provided by lenders for situations involving accident, injury, illness and the resulting time off work. This may or may not include loan modification or forbearance options, which can help, get you over the hill when it comes to these particular reasons. Refinance options can also help. As soon as you know, you may have a problem talk to your lender and explain the situation. The sooner you act the more options are available to you.

Taxes are one of the leading reasons people end up with issues. Especially if those taxes are associated with an inheritance, this is especially true when the taxes outweigh the cost of the inheritance leaving you to pay the difference. This could put and unwanted strain on finances that can leave you facing difficulties with your mortgage.

One of the top reasons in fact it could be ranked number one or two that people have issues with their mortgage is when they go through a divorce or separation. There are a lot of various financial issues that come up during these situations. This can but a strain and force a situation where there is a danger in losing the house or defaulting on the mortgage. Going form a double to single income household can also cause this to occur.

Finally attempting to maintain the mortgage on two homes is doable provided you have the income or the cash flow, such as renting out the one property while you are selling it, occurs. However, many people end up running into a situation where they may have to relocate, for example, because of work and cannot sell their home before they move. This can cause them to overextend themselves by purchasing another home or even maintaining another home as a rental while still dealing with the mortgage payments for the first home. This can leave many people in a financial bind especially if they cannot sell the home in a reasonable amount of time.

These are just some of the reasons you may experience a situation involving a distressed mortgage. While many of these situations are not preventable causing your mortgage to go into default, in many cases can be if action is taken quickly as soon as the problem arises.

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Use Refinance options To Avoid Foreclosure on Your Home

Many people wait far too long and end up facing foreclosure when it is not something that needs to happen. Many options, which can be done early on, can prevent this action from happen. One of the first things that can be done is a loan modification called a refinance. Refinancing allows you to lower your monthly payments as well as extend the life of your loan. You may also be able to lower interest rates and in some instances generate enough excess cash from your refinance to use for debt consolidation.

There are two types of refinance, a short refinance and a regular refinance. There is little difference between the two except for when they are used. A regular refinance can be done at any time and should be done prior to going into a distressed situation. However, if you are already in a distressed situation then a short refi or short refinance is the perfect option to refinance your home. It is similar to a short sale in that it is done quickly in order to avoid foreclosure but not at the expense of having to sell your home.

Getting into a situation where debt becomes a major factor in your life is not hard nor is it something many people plan for but things happen and come up and before you know it, you could be overwhelmed by the payments and end up going over budget every month. Your home is an essential aspect of life and you should not have to worry about losing it. A refinance can assist you in avoiding foreclosure and getting out of debt if necessary depending on your situation.

For example, if you were working as a two income house hold and suddenly became a one income household. You may not be overwhelmed with debt but you may find that your mortgage payments are harder to meet. By taking your current mortgage and refinancing even if you were to only take the amount you have left, you would be extending it over a 30 year period or a 15 year depending on how much you wanted to reduce payments and how much time you had left on your mortgage. This could also depending on interest rates drop your interest rate further lowering payments making it easier to keep your home even on a single income.

If you were in the same situation and needed extra funds to see you over or pay off bills then a refinance may be able to provide you with that little extra you need to avoid a serious situation. It has to be done in this instance before you reach a position of being distressed financially with your mortgage payments. Waiting until you are facing foreclosure and behind seriously in your payments will make this scenario less viable and make a short refinance one of your only options.

A short refinance is one of the ways that you can get out of a distressed situation. It is especially designed for people who are facing foreclosure and looking for ways to avoid it. It offers limited terms usually restricted to a 30 year mortgage and the interest rate is usually higher than on a regular refinance because of the financial situation that would be required in order to make a short refi your refinance option.

Debt consolidation is also a major factor when someone is faced with foreclosure normally foreclosure and overwhelming debt seem to go hand in hand and a refinance in any fore may be able to assist you in relieving the pressure of some of that debt and help you get back on your feet. Usually you can obtain a large amount of cash in a lump sum from a refinance depending on the value of your home, how much you have left on your mortgage in both value and time and so forth. This lump sum makes a great bank to use when settling debts especially high interest debts like credit cards.

The reason being is that many people get involved in having to pay off every debt that they often stretch so far past their means they end up facing things like foreclosure. By settling larger interest debts and netting them under a smaller interest single payment, you do two things. The first is that you reduce the number of bills you have. You are still going to be making the same monthly payment no matter how you use the cash from your refinance so why not use it to eliminate some of the debt that could or is causing you issues. The second is that each debt individually has its own interest rate.

For example, say you have five credit cards, each one of them has an interest rate so you are paying five times the interest on the total balance of all your cards. By consolidating your debt, you drop that to a single interest rate that is lower in many cases than the interest rate on your lowest card. This means that you have the interest you would be paying the other four times ultimately lowering the bill.

It also helps you repair your credit even if you did a short refinance option by settling your other debts you dramatically improve your credit score, rating and history and help to show that you are serious about getting back on your feet financially. Dealing with debt can be difficult but it does not have to cost you your home. Refinance options can be one way out whether you take it as soon as you think trouble is coming, as soon as you get into trouble or when you are faced with foreclosure. You can also use this option to consolidate other debts and get your financial situation looking brighter than ever no matter what issues may have put you in the situation of needing a refinance to begin with; you do not have to let debt take your home.

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Things You Can Do To Avoid Foreclosure

One of the most devastating things that can happen to you and your family is the loss of your home due to foreclosure. Not only does it leave you and your family without a place to live but it also creates a series of negative impacts on your credit that can follow you for years. There are however a few things that you can do in order to avoid foreclosure and keep that black mark from making its way onto your credit. While it will not prevent some damage from occurring, it can help to keep the damage at a minimum.

The first option is the short sale. This is where you sell the house for what is left of the mortgage. You do not obtain any benefits from this. IN other words, many people receive a lump sum of cash in addition to paying off their existing mortgage when they sell a home. This does not happen with a short sale, short sales are merely designed to pay off the existing debt.

They are designed to sell the house for as much as possible. In some cases, this may not pay off the entirety of the mortgage. Short sales are designed to sell quickly though they do have significantly more paper work because banks are involved than if you were simply selling the house through a real estate agent.

A forbearance or forbearance agreement may be possible as well to avoid foreclosure. This is an agreement that stops payments for a specific length of time to allow you to get back on your feet and begin making payments again. This is usually done only in certain circumstances and only if you meet the criteria. You should check to see if you qualify for a forbearance as soon as you experience difficulties. One instance where a forbearance may be granted is when a person in the household dies. For example, if the house was being paid off a single income and that income no longer exists, a forbearance may be granted to allow the other party time to get a job and begin making payments. This is just one example, check with your lender about the various qualifications necessary for obtaining a forbearance. This should be done when you initially set up your mortgage but the information should be available to you at any time.

A loan modification is another way that you can avoid having to face a foreclosure. Loan modifications are designed to create a series of creative financial options that allow you to make payments on your loan but at a reduced amount or on a different schedule. It may call for a reducing in interest rate, payments, it may allow for payments to be made on a weekly or to be made every other week. Refinancing is one form of loan modification.

There are other types but the important thing is to contact your lender as soon as possible before you start having serious issues and works out a plan to help you avoid foreclosure and stay in good standing with your financial institution. Most of them are more willing to work with you when you come to them as soon as you think there may be a problem than if you wait. This shows you are serious and proactive about maintaining your commitment to paying off your debt with them.

It also makes it easier to obtain certain types of loan modification such as the refinancing. Many times refinancing can provide you with smaller payments and a lower interest rate making it easier to manage on a reduced salary or during times of financial crisis. It also can help prevent widespread damage to your credit as well as help you pay off bills and ease some of the overall financial burden you may be facing.

Being proactive is the best thing that you can do to avoid foreclosure. Consider loan modifications first, these are usually easier to obtain than any other form of assistance. If you still have difficulties after this or if loan modification is not an option for you consider, a forbearance if one is offered in your mortgage contract, most of the time you will have some kind of option along these lines.

Finally, if all else fails consider a short sale. This will sell your home quickly and allow you to retain your credit score, for the most part, the reason being is that short sales usually occur after a person has experienced significant damage to their credit; however, you will not have a foreclosure which is more damaging than simply having missed payments and delinquencies. It also will show that your mortgage was paid off in full provided you are lucky enough to short sale your home for the remainder of your mortgage. If not you will still be responsible for the balance. However, this balance is usually reduced significantly and repayment options are usually available.

In order to avoid foreclosure follow these steps, review your mortgage document for information regarding what you can do in times of financial need. Talk with your lender or with other lenders about refinancing options as well as the options available for loan modifications. Do this step as soon as possible, do not wait as waiting may cause loan modification to be removed from the list of available options. If this is not an available option consider a forbearance if you meet the criteria. Being repayment as soon as possible and do everything you can to repair your credit or fix the problem. Forbearances usually have a time limit. This can be three months, six months or a year.

Finally, if nothing else works short sale as soon as possible. This means that your home will be on the market for a longer period of time enabling you to obtain the price you want. Rushing a short sale usually means you may end up short when it comes time to pay the bank.

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