Overcoming Foreclosure » Q&A

What is Re-Amortization?

OC — Wed, 15 Aug 2007 16:26:03 +0000

So you’ve missed a few payments and the bank has sent you several letters letting you know that unless you start making amends, they’re going to foreclose. Again, remember communication with your lender is key because neither one of you wants to go through a foreclosure because no one wins… the bank just loses less.

A re-amortization is exactly what it sounds like, they recalculate your loan after adding your missed payments onto the principal of the loan. What this does is it will increase your payments because your total debt has increased and it’s an option the bank will take if you can show that the payments you missed were temporary and that you can make these new payments. They won’t re-amortize if you’re going to just miss the new payments and fall down that slippery slope once again.

What Is Reinstatement?

OC — Mon, 13 Aug 2007 16:23:26 +0000

Reinstatement is when you basically catch up on all the payments, all the late fees, and all the other costs incurred as a result of you missing your payments. In an ideal world, if you are able to, your lender will probably accept your “temporary indulgence” and set everything back to normal. However, we don’t live in an ideal world and chances are you missed all those payments because of a financial downturn and you’re likely, even if you do catch up and get current, to miss payments in the future.

Regardless, that’s what a reinstatement is and that’s certain one of best options out there if it’s feasible for your financial situation. Unfortunately, unless you find a particular generous benefactor, this isn’t going to be an available option to you.

Late On Payments But Still No Notice?

OC — Tue, 07 Aug 2007 20:31:20 +0000

So you’re late on your payments, sometimes as much as six months late, but you still haven’t received a phone call or letter from your lender demanding that you pay? That’s not uncommon nowadays, especially with the subprime lending meltdown and other lending disasters. What’s going on is that the firms that bought your loans from your original lender haven’t filed any Notices of Default (NOD) because then all that information would become public. The fact that you can’t pay would become public, the fact that the property may be auctioned off at lower than the mortgage becomes public, and all that information is going to feed the financial instruments that institution is trying to sell.

If you’re late, they know… they just don’t want anyone else to, yet.

Why Am I Getting All This Mail?

OC — Fri, 27 Jul 2007 13:30:15 +0000

You are getting all this mail because the property to be foreclosed is now a matter of both public record, where anyone can go and request that information from the courts, and it has been published in local newspapers. There are even services out there that will provide your information to their list of subscribers because your home represents an opportunity for them to benefit financially. Sometimes these folks will be helpful, sometimes these folks will be opportunistic, but don’t necessarily ignore them… some may give you a way out that is better than foreclosure.

Should You Sell To That Preforeclosure Investor?

OC — Fri, 27 Jul 2007 13:23:50 +0000

You can’t make your payments anymore and you’ve tried working with the lender but it looks like the path to foreclosure is inevitable. The next thing that happens is that someone will probably come to your house and offer to buy your house from you, should you take his offer? It depends.

There are essentially two scenarios and it depends on the amount of the offer versus the amount you still owe on the home. Now remember, when the property is eventually auctioned off, any equity that you may have had in the home is gone.

Offer Is More Than Outstanding Loan Balance
If this happens then may want to consider taking this offer if you can’t strike up a deal with the lender because the difference between the offer and the loan balance will be yours to keep. So, if you bought a home for $300,000 and have $280,000 left on the loan when you start missing payments, it may be a good idea to accept that offer because you will get to keep the extra $20,000 difference and satisfy the loan.

Offer Is Less Than Outstanding Loan Balance
This will be an offer you like would want to pass on because the lender probably wouldn’t approve it because you’d be selling the collateral of the loan without fully satisfying it.

What this means is that you’ll probably field a lot of calls from people looking for scenario two and fewer people looking at scenario one, simply because they’re looking for deals. Unfortunately they can always wait until it hits the auction but you can’t.

How Can The Bank Accelerate My Mortgage?

OC — Tue, 24 Jul 2007 19:56:56 +0000

You have may have read in the What Happens During Pre-Foreclosure? article about how the bank can accelerate your mortgage, which was step 6:

6. Bank activates an acceleration clause and demands the mortgage be paid in full.

In every mortgage there is a clause that states that there are certain conditions in which the mortgage may be accelerated and the bank may demand that it be paid in full. It’s known as an acceleration clause and it’s designed to protect the lender from borrowers. If the acceleration clause were not in the mortgage agreement, the lender would have no protection from borrowers who did not pay. They couldn’t start the foreclosure process and they’d be stuck without any resolution.

In addition to failure to pay, some other common negative events covered are change of ownership without the lender’s consent, destruction of the property, or other event which endangers the security of the loan. As you can see, all of those events have the potential to negatively affect the value of the home and so the acceleration clause gives the lender some protection. There are other positive (or neutral) events that can trigger the clause such as when the home is sold or when the loan is refinanced.