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Help! I’m An Upside-Down Investor

Okay, you’re an investor.  You know the power of real estate, which is a good thing. But you never knew real estate could be like this?

You know what it feels like to make $10,000, $25,000, 50 or $100,000 in a single transaction. And, understandably, you got hooked.

So then you probably began to think that you were smart and started to take more chances. You may also have begun to think that real estate was a sure thing and that you couldn’t loss. And then it happened, almost overnight, you started to lose–and I mean lose big-time. And now you know.

Now you know that real estate is not a sure thing and that, in fact, it can be very risky.  You now know that prices don’t always go up and, in fact, they can go way down.

So what do you do now that you may have lost all your equity and may even have been pushed financially below where you were in 1996?

Here are several suggestions that I suggest you reread several times!  

One, get organized. Get all of your documents together and throw them in a single box, for each property you own, and don’t throw ANY documents away.  Two, make a decision: can you really afford to keep all or any of your properties? And, if so, which ones and why?

Three, save as much money as you can. If you are going to try and work it out with your lender, you will need cash to consummate your workout agreement.  Four, did you inadvertently commit fraud in getting your loan approved?  This may be a big concern for some of you who are self-employed?

You do know that Investors in foreclosure are in the best position to get screwed? The reason is that the laws are designed to protect homeowners in owner occupied dwellings.  But there are no laws to protect investors. Investors are completely exposed to financial calamity, in times like these.

But that may be only part of your problem. If you have multiple properties you probably have some of them in the names of others, like your wife, son, daughter, mother-in-law and other people who look-up-to-you and who you love–and who you do not want to put on the alter of sacrifice? 

But still we’re not finished.

Because, chances are you also have other assets you want to protect?  Other assets that may be contaminated by a foreclosure action. Other assets that you prefer not be subjected to scrutiny or supervision by the court or IRS?

Your fears, of course, can all be summarized in saying the words deficiency judgment.

So what is a deficiency judgment? 

A deficiency judgment is essentially a debt you receive compliments of your lender–for their losses–due to your foreclosure. You can think of a deficiency judgment as a swamp full of financial alligators, just beneath the surface of quiet waters, waiting for you to enter the water and then they surface and try to eat you alive.

As I just mentioned, investors have no protection under the law, so it’s a much more difficult task for you to side-step a deficiency judgment.  And even though you don’t want to worry “a stitch in time saves nine”.

In summary, if you’re an upside-down investor in today’s market you face some real challenges. But, if you get organized, become proactive and move with all due haste, you may be able to escape almost whole and “live to fight another day”.

This article has been written for discussion purposes only and is not legal or tax advice. For legal advice please speak to your attorney. For tax advice please speak to your tax professional.

What Is Loss Mitigation?

Loss mitigation is the process of talking to the bank or other lender on behalf of a homeowner behind on making their monthly payment.
 
Loss mitigator, lender mediator, foreclosure consultant, bank negotiator–all refer to the same thing. Mitigation or mediation always involves two or more people with some kind of difference. 

Typically, in our world, a homeowner has fallen behind in making their monthly payment to the bank and they are now in danger of losing their home to foreclosure, because they owe the bank thousands of dollars. 

The job of the loss mitigator is to work out a deal with the bank in which the homeowner is allowed to keep their home and to minimize the cash required to do that.
 
The industry is not new but the surge in demand for our services is.  A demand created by what is now being called a foreclosure tsunami. The great wave of homes forced into foreclosure, due to falling home prices, bad loans and the credit crunch.

So homeowners with “credit” based financial loan products, like those with balloon payments and adjustable rate mortgage loans–now sometimes find themselves in a credit less market.  It’s somewhat like combing water with oil; they don’t mix. So what do people have to do?

Work-out a new agreement with their lender or not. And just what do I mean by “or not”?

Well, each family’s circumstances are different.  And what we find is that some folks just have bad loans; and even with a good work-out arrangement–they will still be trapped between the proverbial ” hard place and a rock”. 

So in those instances–where a family simply cannot afford the new payment or their current one–the idea is to help them exit gracefully. Help them exit with as little pain as possible.  But there will be some pain and loss involved.

Holistically speaking, there are five areas that need to be addressed when a homeowner finds themselves in trouble with their home.  Positive cash flow = Income-Expenses;  Your FICO credit score; Debt liabilities; Taxes and the accusation of Fraud. With the help of the homeowner the properly trained loss mitigator will find the balance between these elements.

Although the loss mitigator has to try to keep things as simple as possible, the fact is that foreclosure is complicated and tricky. And emotion, timing and document organization play an important part in the result.  

In summary, a loss mitigator is a bank (or other lender) negotiator. And our job is to work out a deal with the bank in which the homeowner is allowed to keep their home and to minimize the cash required to do that, or to help the homeowner exit gracefully–if they can no longer afford their monthly payment obligations.

This article was written for discussion purposes only. The author is not an attorney or an accountant. For legal help please speak with your attorney.  For financial help please speak to your accountant.

Your Bills Are Worth Bucks

Here is something you can do that won’t cost you any money and at some point just might make you some. And depending on what you do and how you do it–it could be worth big bucks to you. So let’s dedicate this article to all of your worthless bills.

So what bills am I talking about?  I am talking about ALL of those annoying sheets of paper that you and I receive daily in the mail.  Those annoying sheets of paper that tell you who you owe, how much you owe, how much you need to pay and that you need to pay it NOW.  I’m talking about bills, debt and debt related paper. The stuff you probably open over the trash.  So you can say we’re talking about how to turn trash into cash.

As much as we are trained to love money, money is only paper. Think about that! Money is paper. Paper that, for sure, you believe in; but paper, still.  But what if someone else believes in all those annoying bills–that paper–that comes into our lives everyday?  What if that paper has value–even though we think of it as being worthless?

If you’re up to your ass in debt, as many of us now are, what I am saying may seem like a real waste of your time. But I promise you, there’s a least a $1000 in there; probably more. So what is my point? Save copies of ALL those seemingly worthless financial documents.

Okay, so you’re probably reading this article because you’re behind on your mortgage payments.  So let’s address that issue first. 

Those seemingly worthless sheets of paper are what you are going to need to convince the bank that they should help you.  They are your proof.    Those documents verify or back your claims. Want to make your life easier?  Keep all those financial documents.  At a point you will discover they come in handy.  

Now a question is which sheets of paper?  I don’t know, so save them all. 

Depending on your situation you may need those documents to assist you for one or more of the following reasons.  A mortgage lender; The IRS; Credit Counseling;  Public Assistance;  Social security;  Health care or Unemployment Insurance.
Here’s an interesting tip.  Most of these agencies want the same stuff.  Monthly mortgage payment documents, 3 or 4 months of bank statements, Check stubs, Copies of bank over-drafts, closed account notices, Rent receipts, Tax notices–you get the idea?

The kind of stuff that doesn’t mean a thing to you and me but, could quickly and easily help weave together a wonderful financial story that transforms a seemingly worthless sheet of paper into money into your pocket…or, at least, not out of it.  So stop tossing ANY of those documents into the trash can.  You may hate yourself for it.

How To Get Organized

“Look whose talking”.  Here’s one way to get organized.  Take two boxes or two folders.  Label one TAXES, the other BILLS.  Now toss all tax information into one, and everything else into the other.  You brilliant folks out there ‘help em out’, but this will help you get started.

In summary, if you find yourself long on ideas and short on money–listen up honey: Their is cash in your trash.  So please do not throw away ANY financial documents–from now on. Save those seemingly worthless sheets of paper. And you will discover that at one or more of the agencies that you WILL be dealing with–that those seemingly worthless sheets of paper have monetary value when recycled.

This article was written for information and education purposes only. The writer is not an attorney or accountant. So for legal help please see your attorney. And for tax assistance please see your tax professional.

Foreclosure Process | Timeline For Foreclosure

Understanding the timeline for foreclosure in your state is an essential element if you want to save your home.  This understanding benefits you in a number of ways.

There’s a big difference in what your options are if you have several months as compared to several weeks.  You have more time to think and plan.  You have more time to put the whole process into perspective. You have more time to raise money. 

The timeline for foreclosure is different in each state.  So you will want to make certain that you clearly understand what the timeline is where you live. In this article we will investigate the timeline TIMEFRAME for foreclosure in some of our states.

The foreclosure process is fastest in Texas, Alabama, Rhode Island and Missouri. Unimpeded the entire foreclosure process takes 3 months in those states. Reading these words may not help you fully grasp just how fast this time is. But to try and help you put this timeframe into perspective–it is comparable to the time it would take for a woman to give birth to a child in the first trimester of pregnancy.

Unfortunately for those of you in these states, your chances of successfully evading a foreclosure–once it gets started–is somewhat like a person trying to stop an oncoming train moving at full speed by  standing on the tracks waving their hands frantically as it approaches. Remember what happened when you put a penny on the railroad track?

A number of other southern states–although not only southern states–have timeframes that are, within a month or two, the same as Texas. Georgia, Alabama, Arkansas, Mississippi, New Hampshire, Tennessee, North Carolina, Arizona and West Virginia all have timeframes that end within 4 to 5 months.

Ten states have a timeframe of 7 months: California, Kentucky, Colorado, Alaska, Nevada, New Mexico, Oklahoma, Oregon and South Carolina.  Seven months is more than twice as long as three months, so those of you in these states can just sit back and be cool, right?

Foreclosure sneaks up on you! Most of the time of foreclosure EVAPORATES before most of us can really understand the danger we are in. A psychologist’s would say we are in a state of denial.

Why would you think you were in danger of losing your home after only one missed payment?  Or even two?   After three months I would think it would be obvious to you that you were in trouble.  But what should you do? 

If you must experience foreclosure the best place in America to be is The Pine Tree State, Maine. The foreclosure process takes almost two years or 22 months.  Vermont, where my grandson, Pierce, will soon go to college, takes 17 months.  So does Iowa.

New York, New Jersey, Ohio, Illinois, Indiana, Minnesota and Wisconsin all take 12-14 months. The challenge for people in these communities is that they may think they have all the time in the world.   And that mindset could prove costly.

When your ultimate goal is to save your home, that mindset can prove to be costly because some federal workout programs may only be available when the number of months you are in arrears is within certain parameters.

A government program might require that those with delinquent mortgages be LESS THAN say, 10 months in arrears to qualify for a particular program. And, of course, you are disqualified beyond that.  The point is check with someone who knows early to best position yourself to save your home.

In summary, what you will want to understand quickly is what the timeline or timeframe for your state is.  This can be crucial in short timeframe foreclosure states like Texas and Missouri, where the entire process–from the start to the sheriff requesting that you leave your home for good, immediately–can happen in 3 months.

This article was written for information and education purposes only. This writer is not an attorney or realtor. So for legal advice please speak to your attorney.  And for advice regarding real estate please speak to your realtor.

Foreclosure Process | How Does Foreclosure Work

The Foreclosure Process.  How Does Foreclosure Work?

The foreclosure process is a legal process in which your lender takes possession of your home because they declare that you failed to meet some part of your agreement with them.  They may have the legal right to take the house because it was used as the security for a loan.

The foreclosure process varies from state to state, so check with your local authorities to make certain you understand how the process works in your state. I will explain it for California.

In general, foreclosure in California works like this:

Assume for the sake of argument that day 1 is January 1st. That your monthly payment is due on the 1st day of each month. And that you can no longer afford to pay.
* Jan 1 your payment is due

* Jan 16 you receive a late payment notice for Jan

* Feb 1 your payment is due and you are now 2 months in arrears

* Feb 16 you receive a late payment notice for Feb

* Mar 1  your payment is due and you are now 3 months in arrears

* Mar 16 you receive a late payment notice for Mar

* April 1 a Notice of Default is recorded
The foreclosure process has now FORMALLY commenced. You have 90 days to cure the problem or a sale date will be set for your house to be sold to the highest bidder at public auction.
* May 1st , 30 days have passed

* June 1st  60 days have passed

* July  1st  90 days have passed
A sale date is set.  If necessary, a Notice of Sale is sent to the IRS, 25 days before the sale date.
*  The Notice of Sale is recorded 14 days before the sale date.
* On the sale date the property is sold to the highest bidder at the public auction

The point to understand is that in California your house can be sold within 7 months by an aggressive lender.

In summary, how does foreclosure work in California? Typically, the foreclosure process works like this–your lender allows you to miss up to 3 payments, and then they file a Notice of Default with the intention to sell your home at a public auction; if the problem is not cured within 90 days. After 3 more months a sale date is set and 14 to 25 days later, your house could be sold. If the house is sold, it is no longer yours anymore, and so you must move.

This information has been presented for informational and educational purposes only. The writer is not an attorney. So for legal advice please speak to your attorney.

The Most Important Steps To Take To Save Your Home From Foreclosure

To save your home from foreclosure understand this: Time moves faster than we can think clearly.

It’s hard to believe your mind might be playing tricks on you, when you are in danger of losing your home.  Then you tell yourself, your foreclosure can’t be real–so it must be fake. So you ignore it, until it’s to late, and they take your home away.  This happens everyday.

Find out the foreclosure timeline in your state today.

The foreclosure timeline is the sequence of events and number of days it takes for the foreclosure process to begin and end–and you loss your home. This timeline varies from state to state. Texas and Georgia are the fastest; New York and New Jersey may take more than one year.

But don’t be fooled in the Big Apple or Jersey just because you have more time.  More time often means more debt–debt that you probably cannot afford to pay.  Also some programs to stop foreclosure may have certain guidelines that you have to meet in order to qualify. Guidelines that have to do with the number of months you are behind on your mortgage.  So be careful.  Or ultimately what you think is an advantage may be the reason you lose your home.

In states that foreclose fast, if you do not know what the foreclosure timeline is BEFORE the notice of default is issued–your chances of success are slim to none.  You simply do not have the time.

Embrace the fact quickly that you are in danger of losing your home.

We are creatures of habit. We do not like to change. Be aware that your resistance to change can kill your chances of saving your home. This is a very subtle, mental interaction inside your mind that makes you struggle with your own thoughts.   So, who do you root for? Are you simply being paranoid or are you in danger of losing your home?  How do you pick the winner?

Develop a Plan A, Plan B and Plan C or get help.

Things don’t always work out the way you want, do they?  So this is the reason you will want to come up with several plans of action. This is not a game. You do not want to end up on the streets. So take the time to figure out what you want to do. Do your resources allow you to do what you want to?

If you are unable to do what you want to do most, then what next? Create the three most viable plans you can think of!  Try to focus.  Make some time today. You will not regret it.

If you decide you need help, the sooner you get it the better.

Foreclosure does not seem real.  It is mostly an illusion until AFTER it happens to you. That’s why it can be difficult to make the kinds of changes and decisions you will need to make, and move with the speed you will need to move. But as I suggested to you from the start–time is not waiting on you and will not change no matter what happens to you.

My point is you will probably need more time than you think to turn this situation around.  So if you know you will need help, the sooner you ask for it the better.  Try not to wait until the last minute to ask for help.  That’s makes it more difficult for people who want to help you.

Save Money

Your lender will want money when you work things out, so save, save, save.  You’ve heard the statement  “cash talks and bullshit walks”.  Never was that statement more true than now.

Work Your Plan

Your plans help you prepare and organize to solve your foreclosure problem. So once you know what you want to do, like Nike says, Just do it!   Now is the time to speak with family, friends, professionals, government agencies and non-profit agencies to see how they may assist you in solving your problem.   You have the greatest chance of success by getting into action fast, armed with a plan. 

In summary, the important steps to take to save your home from foreclosure are:

*  Find out the foreclosure timeline in your state today.
*  Embrace the fact quickly that you are in danger of losing your home.
*  Develop a Plan A, Plan B and Plan C or Get Help.
*  If you decide you need help, the sooner you get it the better.
*  Work your plans.
*  Save money.

This article was written for discussion purposes only and is not intended to provide legal advice. For legal advice please speak with your attorney.

Which Is Worse Bankruptcy Or Foreclosure

Which is worst bankrutcy or Foreclosure?

Foreclosure is worst because you loss your home.

Your home is where your heart lies. Your family lives. Your friends hang out. Your children grow.   It’s your santuary. It’s an important part of your identity. It’s where you find the most peace.

Foreclosure lowers your credit score more, too. 

Bankruptcy and foreclosure give you the two biggest negative credit scores.  Both lower your credit score in the neighborhood of 200 points.  Both stay on your credit report 7 to 10 years. But the total effect on your score of bankruptcy is less because a bankruptcy gives you debt relief.

After you file bankrutcy it can be very easy to get new credit . This new credit is easier to get becase you are a much better credit risk–you have less debt and you cannot file bankruptcy again for 7 years.

In fact, it has been reported that if you immediately re-establish your credit after a discharge you can easily have a 700+ credit score after 2 years, and get a mortgage, as long as you have a good reason for the bankruptcy.

Your credit score is dynamic–constantly changing from month to month.  And when you are in a position to pay your bills on time again, consistently, and if you monitor your credit carefully too, it will be obvious to you why this is so.

In fact, at some of the online credit services you can analyze your future credit score–for whatever time period you want and for different payment amounts and for different combinations of your debts–to see exactly how your credit score changes overtime. 

For example, let’s say your credit score is currently 612 and you input values for your on-time car and mortgage payments for two months.  The system will then crank out the change in your FICO score. Let’s say it raises your score 8 points; then it would show a score of 620.

In summary, which is worst bankruptcy or foreclosure? Forclosure is worst because you loss your home and your credit score hits bottom.

This information has been presented for educational and entertainment purposes only. The writer is not an attorney or accountant. For legal advice please speak to your attorney. For tax advice please speak to your tax professional. And for advice regarding real estate please speak to your realtor.

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