fl foreclosure laws
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Questions & Answers about Foreclsure
Q Before I think about walking away, should I explore other options?
A Yes. Before deciding to sell your property and have Walk Away Clear experts help you come out with no debt, you should explore all options available that fit your situation. Case Managers at Walk Away Clear will talk to you about any and all options available. Recently the government has come up with some additional options for homeowners and we will work with you and help you understand if these options are ones you can qualify for and if they are right for your current situation and your short and long-term goals. If you are underwater in your mortgage (meaning that you owe more than what the property is worth) it may be difficult for you to modify your mortgage, and going further into debt by refinancing may not be a good option, but there are some other options that may be suitable for you.
We are, in fact, experts at helping you walk away clear, but we will help you make sure this is the best route for your situation.
Q What is the Obama Plan?
A The Obama Plan is a plan that helps homeowners lower their mortgage payments. To qualify, one must meet certain specific criteria; it may be easier to do so if your home loan is backed by Fannie Mae or Freddie Mac.The plan boils down to two basic solutions: First, more financing opportunities. Nowadays, you need at least 20-percent equity in your home to qualify for a re-fi… But that’s nearly impossible for the millions of homeowners who owe more than their home’s market value.
Under this part of the plan, you may qualify for a rate adjustment if:
‘ You’re current on your mortgage payments…
‘ Your loan is owned or backed by fannie mae or freddie mac… and you have enough income to pay the new mortgage payment.
Households that don’t qualify include those under “jumbo” mortgages, which generally are loans above 417-thousand dollars and those whose property values have dropped too much.
The second part of the plan targets homeowners in danger of foreclosure. You may qualify for help if:
‘ You’re behind on your mortgage payments…
‘ The mortgage is on your primary residence…
‘ If your monthly mortgage payment is more than 31-percent of your monthly gross income.
The program’s designed to lower interest rates for five years through a loan modification program. But homeowners who won’t
Qualify include those who’ve been deemed irresponsible in their borrowing, or people who bought homes for investment purposes. Many times this process may take up to a year to find out if one’s application is accepted.
Our professionals at Walk Away Clear will be glad to discuss this with you and find out if your particular situation qualifies for a
loan modification under the Obama Plan.
Q What is a Strategic Default?
A When a borrower decides to stop making payments on a mortgage after learning that the value of the property is less than the amount owed and recovering the equity invested or gained would take years. Mortgages are loans backed by property and such collateral is used by banks to recover lent money. Strategic Default is a calculated risk to walk away from a bad investment or business decision.
Strategic Default vs. Loan Modification: Going deeper into debt to pay for a home with negative equity may be financially unwise and irresponsible. A Strategic Defaulting homeowner will use the law to their advantage, by strategically and legally securing for themselves a more favorable financial position.
Q Can I Strategic Default an Investment Property?
A Yes, all types of properties may be Strategically Defaulted on.
Q Does Walk Away Clear buy the properties straight out?
A No, we work with lenders, government programs and private investors depending on your particular situation. We help market the property so that it can be sold and the lender can get paid and you can regain your financial freedom.
Q What are the options for foreclosure?
A A Short Sale, Deed in Lieu of Foreclosure, and Loan Modification are examples of standard “work out” options to avoid foreclosure. Lenders will often extend these options to everyone, but this does not mean that a borrower is automatically approved for it. In pursuing a “work out” option, the lender will ask a borrower to provide a full financial package i.e. pay stubs, tax returns, bank statements, etc. in order to see if they can approve the borrower for anything. Applying for these types of options is similar to applying for a loan.
Q What is a Deed in Lieu?
A A deed given by a borrower to the lender to satisfy a debt and avoid foreclosure. Also called: a “voluntary conveyance.” when a borrower signs the property back to the lender. Typically, Deeds in Lieu are not been approved by lenders if the borrower can afford to make payments; if the borrower has not marketed the property for sale; if the value of the home is substantially less than the amount owed; if there are outstanding liens on the property (such as second mortgages, judgments from creditors, or tax liens); or if the borrower is in the process of declaring bankruptcy. This is when the homeowner turns the property over to the bank. The impact to your credit is about the same as a short sale. If a lender is willing to accept this, it may be a fast solution. On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, he can get a deficiency judgment and try to collect it from you. Truth is that many times banks are reluctant to accept this and want to make sure you tried all other options; for example,
Bank of America lists on their site that: You may be eligible for a deed in lieu of foreclosure if:
‘ You are going through a hardship (for example, a job loss, divorce or a medical emergency)
‘ You are unable to afford your current mortgage payment
‘ You are unable to modify your current mortgage to make it affordable
‘ You can’t sell your home for less than your remaining mortgage balance (also known as a “short sale”)
‘ You have tried to sell your property unsuccessfully for at least 90 days
‘ You are facing foreclosure, and want to reduce the impact to your credit
Q What is a mortgage Modification?
A A process where the terms of the loan are changed from the original ones, typically resulting in the change to the loan´s monthly payment, interest rate, term or outstanding principal. Principal reductions are very rare. The decision to modify a loan is the lenders. This allows the loan to be reinstated, and should result in a payment the Mortgagor can afford. The difficult part is that a lender is not motivated to change your loan for various reasons, and it usually requires that the homeowner have a certain amount of equity, usually 20% or more and this makes it difficult for the homeowner to obtain any changes. The cause for this is really rather simple, there’s no financial incentive for a lender to offer a loan modification to most homeowners. As it turns out, many lenders aren’t really lenders at all. What they actually are is a loan servicer. This means that they essentially take the mortgage payments and distribute these payments to the actual investors. Most home loans over the past 10 years have been bundled and sold as an investment instrument. This has created a market for loan servicers, companies or divisions at banks, which simply manage the accounts and are paid a commission for doing so. They don’t have the legal authority to modify conditions of the loan. All they can negotiate are repayment in full plans or forbearance plans. The actual owners of the home loan are the hundreds or even thousands of investors who own a part of many loans. They would all have to agree to change the terms of a mortgage contract and this is unlikely to happen. Thus, the loan servicer has a strong incentive to stall or delay any kind of loan modification. Why? Because they get paid a commission to do it. They get paid by the investors for their collection efforts up until the actual sale or foreclosure, and many times the fees paid during the foreclosure process are paid to firms that are related or owned by the banks. However, they will not profit if a loan is modified.
A professional at Walk Away Clear will immediately tell you if this is a route you are able to take, whether you qualify or not, and will help see if this is the best option for your particular situation.
Some people that are using strategic defaults are doing so because they have become so exasperated at their lenders for not doing more to help them such as a loan modification. Anyone who has ever tried to get a loan modification would probably be the 1st to admit that lenders do not make it easy for a borrower to get one. Often times borrowers can’t get responses from banks to their questions and are repeatedly told to send in the same documents over and over again.
Q If my property is foreclosed on and taken by the bank, can the bank come after me and my assets for the total debt?
A It depends greatly to what extent depending on the State Laws. If it is a non-recourse state (non-judicial) laws may protect the homeowner’s assets. Some of these states are California and Arizona. In recourse states such as Florida or New York, lenders are able to come after you and your assets to recover the total debt including penalties, fines, and more importantly the short fall of the price your home was auctioned for vs. the loan amount.
Q What is the difference between Walking Away and Walking Away Clear?
A We are aware that “Walking Away” is a term in real estate that is being used a lot these days. It is mainly used for people whose
properties are underwater and they decide to avoid dealing with the situation and turning their backs on it. This is something that is
in no way recommended. If your home is foreclosed on, consequences for your future may be extremely negative. Please see
chart below discussing short sales: Benefits to the Seller. You can chose to Walk Away ethically and responsibly through a short
sale negotiation with the bank that guarantees a total different outcome including being forgiven of your debt forever with a lesser hit
to your credit and this done at no cost to you. Recently the Obama administration has implemented laws and regulations to
promote short sales and to assist homeowners.
Q What are short sales?
A A short sale in real estate occurs when a lender agrees to accept a discounted payoff on a loan. In most cases, the
home owner owes more on the property than the home is currently worth. This occurs only when a home seller qualifies
for a short sale through proving a hardship.
Q Why does the bank accept less for the property than what it’s worth?
A First of all, the foreclosure process is an expensive one for the
bank. The process is long and as the bank is not getting
payments from the homeowner during the entire process, hefty
attorney fees are incurred. Once the property is foreclosed on,
the bank has now to list the property, take proper care of holding
costs and maintenance costs to avoid liabilities and fines. These
homes are by then often times in need of repairs. A lot of time
has gone by and now the property may be sold at auction for
less than market value anyway. A judgment for the deficiency
amount including fines and penalties may be obtained, incurring
more legal fees, and many times these are very difficult to collect
as one must assume that the homeowner is going through some
kind of hardship, has no money or assets and many times has to
resort to bankruptcy. Foreclosures may end up costing the bank
hundreds of thousands of dollars. A short sale is an attractive
way out for banks who have homeowners with negative equity
often times going through hardship who can’t continue paying
their monthly payments. They obtain immediate cash, incur no fees, no holding costs, no repairs, and do not have to go
through the entire process of foreclosure.
Q How does a short sale work?
A A qualifying homeowner hires a full service short-sale specialist firm; they list the property with an in-house broker,
obtain an offer, submit all pertinent paperwork to the bank and proceed to negotiate with the bank. Most times the
outcome of the negotiation is with the condition that the homeowner is forgiven for the deficiency between what is owed
and the negotiated amount. Usually this process may take between 2 to 4 months. This service is provided for FREE by
Walk Away Clear. The firm is paid by the bank which pays a broker fee for representing the seller.
Q Why is it to my advantage to do a short sale?
A A foreclosure can impact your credit far more than a short sale, especially in the long term. In fact, some banks don’t
report a short sale. In addition, in the event of a foreclosure, in many states the lender will seek a deficiency judgment
in the amount you owe. They could even come after other properties and assets of yours, including vehicles. Your
credit could recover from a short sale in less than two years, whereas a foreclosure or bankruptcy can take 7-10 years.
A short sale will likely lower your credit score by about 50-120 points. The hardest hit to your credit comes from missed
mortgage payments rather than the actual short sale itself.
Q Can I do a short sale without being in default of my mortgage payments?
A The answer is maybe. Some lenders will accept a Short Sale file for approval on loans that are not delinquent. Not that many are documented. Other lenders will not accept the file until the loan is delinquent. Each lender is different and it is hard to say what they will or will not do
Q What are the qualifications for a Short Sale?
A The main qualification for a short sale is that you are in some type of “financial hardship.” This can include: loss of
employment or income, divorce or separation, relocation or job transfer, major illness and medical expenses, high dollar
repairs without the resources to make them, increased bills or higher living expenses. A good rule of thumb is that a
short sale is not for those who simply “want” to sell, but only for those who “have” to sell. You typically must prove your
inability to pay your mortgage each month, however many lenders have become more lenient and will make exceptions
sometimes for homeowners who are not even in hardship.
Q What if my home is worth more than my loans, but I could not pay the closing costs?
A You can still short sale your home. Many homeowners in the country have avoided adjusting the price of their home to
current market value in a desperate attempt to receive enough money back to pay off their loan balances and closing
costs. If this is you, you are just delaying the inevitable as home values continue to fall across the country. In a short
sale, we charge all traditional sellers’ closing costs to the lender!
Q If I sell my home short, can the bank come back after me for the money?
A Not in most cases, we will work to get a full release for you at closing. This release will fully forgive any deficiency
between the amount you owe, and the proceeds from the sale of the home. You should consult an accountant
regarding tax ramifications, especially if it is an investment property. Depending on the state in which you reside, some
laws forbid banks from attempting to collect deficiencies under certain circumstances.
Q Who will pay the Realtor commission?
A Your lender pays the commission. They pay a regular Real Estate
Brokerage fee, just like a home seller would in a traditional
transaction, and just like they would if they foreclosed on your
home. Again, you pay $0 out of pocket. See Realtor
Q How much work will a short sale take?
A Not much for you. We will ask you to gather certain financial information and forms for us to present to your lender. Our
agents will handle the negotiations and details with your bank as well as the process involved in selling your house. We
will also keep you updated and our case managers are always available for you.
Q What happens to the money that is forgiven from my lender?
A Any balance shortfall on your mortgage will likely be written off as a loss by your lender. Because of this, your lenders
may also send you a “1099” for any amount forgiven. Due to the Mortgage Debt Relief Act of 2007, you are NOT
required to pay taxes on this money if you short sale your primary residence prior to 2012. Consult your accountant
with any other questions regarding this.
Q If I am going through foreclosure, can I do a short sale?
A YES! In fact, the bank will likely be more than happy to work with you on a short sale. It is to the bank’s advantage as
well as yours to work out a short sale. The foreclosure process costs a lender on average $58,000 and much more in
instances! In addition, too many foreclosures look bad to a bank’s investors.
Q Can I stay in my house until the short sale is completed?
A YES. You will not have to move out until the closing. In fact, if you are facing foreclosure and we are actively working
with your bank, we can typically get your lender to delay the foreclosure proceedings and make it possible for you to
stay in the home for some time.
Q What if the terms of the short sale the bank gives me are unfavorable?
A If the terms of the short sale are not in your best interest, you are not required to sell the property and complete the short sale. Do remember though that a short sale will have the lender forgive you of the debt and is the best option to avoid foreclosure or bankruptcy and will have the least negative effect on your credit. If you choose not to do a short sale the bank will NOT forgive you of the debt and may continue to pursue you for the outstanding loan balance.
Q Can my current Realtor work a short sale on my home?
A Unfortunately not; in many cases, While there are many agents that do negotiate and work short sales, most lack the knowledge and experience necessary to properly execute one. A short sale is NOT part of the Realtor “basic training.” Even most agents with CDPE (Certified Dist. Property Expert) or other Realtor® designations are inexperienced with them. The results can be disastrous.
For more detailed information visit: http:// www.walkawayinfo.com
About Walk Away ClearOur professionals are experts in making sure you walk away clear from a losing situation; ethically, and responsibly; with the least amount of impact to your life and credit, and the most benefit to you and your family’s future financial well-being, and at no cost to you the homeowner. These are the most frequently asked questions and need-to-know answers about foreclosure.For more detailed information visit:http:// walkawayinfo.com