Yes, Indiana homeowner Lisa Stuart almost lost her home because she didn’t know about an unwritten HAMP rule. She was put into a trial modified mortgage and set her account up to automatically make the payment on the 25th of the month. She was concerned that if she set it up to transfer on the 1st, when payment was due, that it wouldn’t be credited because one of the trial payment due dates fell on New Year’s Day. But GMAC mortgage wasn’t impressed by her responsible attitude. Their collection department called her to tell her that she owed them $4,000 of would be foreclosed on, and that she has been kicked out of HAMP for making her payment too early. And that’s not the only secret rule that can get you kicked out of the program. Continue reading ‘Borrower Kicked Out of HAMP for Making Payment Too Early’
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73-year old James Bruce found an unusual way to pay his mortgage when he got behind — he robbed 3 banks at $600 a pop to come up with the cash. The guy probably had other alternatives — he had run through his retirement and so he and his wife only had Social Security to live on and the earnings they could eke out from a small pottery business. He was too embarrassed to ask his lender for help (but apparently not too embarrassed to rob banks!). But Mr. Bruce had options — he didn’t have to rob banks to save his home. Continue reading ‘Not the Best Solution: Retiree Robs Banks to Pay Mortgage’
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Ordinarily, I’d say no, you shouldn’t walk away from your mortgage. It’s bad for your neighbors, bad for your credit, and bad for the economy. And besides, you’re a moral person; you’d feel icky. However, I’ve also seen countless friends and acquaintances run through their retirement accounts and their kids’ college funds and finally their emergency savings to hold on to properties until eventually they went into foreclosure or were short-sold. The owners ended up with trashed credit, no property, and no money. Some of these people are now 55 years old with no savings or investments to show for it. Retirement is looking pretty bleak. Continue reading ‘Should You Walk Away From Your Mortgage?’
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The rules change when good economies go bad. Old standbys, like always pay more than the minimum on your credit cards, retire your mortgage as soon as possible, and a home equity line of credit (HELOC) is the best second mortgage because of its flexibility. Today, those rules are good for lining the bird cage but not much else. Continue reading ‘Rules Were Meant to Be Broken: Minimum Credit Card Payments’
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Reverse mortgages can get seniors out of mortgage credit jams. If you are 62 or better and have substantial equity in your home, you could pay it off with a Home Equity Conversion Mortgage (HECM). You could kiss your mortgage payments (and your foreclosure worries) goodbye with this FHA home loan. Continue reading ‘Reverse Mortgages Can Avert Foreclosure’
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Yes, rates are low. And if you are paying over 6% on your mortgage, you should probably look into refinancing and saving some money. However, not everyone who could benefit from refinancing will be able to do so. Here are three reasons you may not be able to refinance–and what you can do about them. Continue reading ‘3 Reasons You May Not Be Able to Refinance Now–And What You Should Do’
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All the buzz these days is about the homeowner rescue programs–Making Home Affordable and it’s babies Home Affordable Refinance Plan (HARP) and Home Affordable Modification Plan (HAMP). But eligibility for these programs requires that the property be a primary residence. What about investors? Is there any help for them? Continue reading ‘Investors In Trouble: Any Foreclosure Help for Borrowers with Rentals?’
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Foreclosure: Kiss Your Next Mortgage Good-bye
Lenders consider bankruptcy a serious credit issue, but not as bad as home foreclosure. Just being late with mortgage payments is counted heavily against you, worse than having a collection account. Those who skip their mortgage payment to pay other bills are doing their credit serious harm. Continue reading ‘Why Bankruptcy Is Better than Foreclosure’
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Outfits have sprung up all over offering desparate homeowners a way out — making promises like the following, which were copied from one firm’s Web site:
Your lender WILL NOT be able to call you in attempt to collect!
Your lender WILL NOT be able to collect any deficiency or loss they may receive by you walking away!
You WILL be able to stay in your home for up to 8 months or more without having to pay anything to your lender!
You CAN have the foreclosure REMOVED from your credit!
The catch for these extravagant claims is, “IF you qualify….” Qualifying to be able to avoid deficiency, for example, means living in one of the only 2 states in the country in which it is illegal to collect deficiency judgments — or having no money, in which case the last thing you want to do is give $1,000 to a company who does nothing you can’t do yourself for free. Time Magazine ran a story in June which stated that by and large these outfits, which charge cash-strapped homeowners about $1,000, perform services that homeowners can get for free elsewhere–and the worst ones may do nothing but “handholding” after taking your money.
And removing the foreclosure from your credit? If it sounds too good to be true….remember all those scams a few years ago involving companies promising to make bad credit histories “disappear?” Too good to be true, but a lot of people lost money, and some even found themselves in hot water for committing fraud.
So ignore the extravagant claims and avoid these sleazy companies. Your best (and cheapest) sources of help don’t cost a thousand dollars. Time suggests you first contact your lender, write a letter documenting your circumstances and asking for help, and turn to non-profit housing counselors for assistance if you need it. And if you are solicited by these companies? Remember the “weasel words” typically found in advertisements for questionable products. “Actually results will vary,” “Results not typical,” or in this case, “If you qualify….”
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While bankruptcy doesn’t carry the same stigma that it used to, the idea of filing for Chapter 7 or 13 protection from creditors fills many with fear and even shame. It needn’t. In fact, in may be the best way to keep your home if you own one and inflict the least amount of damage to your credit score. The key is to act quickly when you get that pink slip or those divorce papers. Months of waiting, avoiding the mailbox and screening your calls will only make things far worse — a clean break may be the best route. For example:
Working as a loan officer, I had a recently-divorced client come in who had always had good credit. When she realized that a creditor of her ex-husband’s was coming after her for a six-figure debt, she promptly got a lawyer and filed for bankruptcy relief. She reinstated all of her own debts and continued to pay them as agreed. The bankruptcy discharged the ex-husband’s obligation and she was approved for a mortgage within months. What my client did that was so smart was that she didn’t wait until she had missed a bunch of payments on this debt — she halted it right away and her credit score remained in the 700s.
Denial results in all kinds of evils — foreclosures when you don’t want to talk to your loan servicer, late or missing payments, and credit scores that can even make it harder to get a new job after losing the old one. By facing the problem and asking for help — from your creditors, a credit counseling service, or an attorney — you can solve the problem quickly and limit the damage.
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