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Tips to Help Avoid Foreclosure

The Phoenix real estate market is wide open with exciting opportunities for prospective homebuyers.  With astute research and some negotiating, opportunities abound.  The downside to any imbalanced market is that the presence of a clear-cut winner also implies the presence of a losing party. 

 

The Scottsdale real estate and Phoenix real estate markets currently face among the highest foreclosure rates of any major city in the United States.  The huge boom cycle of 2002-2006 has created an echo where an increasing number of homeowners find themselves in financial distress.  What can homeowners do in this situation to possibly avoid foreclosure and keep their homes?

 

  1. Don’t ignore the issue!  They say ‘ignorance is bliss,’ but it’s also one that’s paid for in spades when you’re talking about financial delinquency.  Act now & you will minimize the negative consequences.
  2. Let your lender know!  Contact your lender the moment you recognize that you could be in trouble.  Now more than ever, lenders are working hard to keep borrowers in their homes and keep their real estate holdings down.  Banks aren’t in the business of owning homes…
  3. Read the mail from your lender!  Be sure to open all mail that your lender sends to you.  You need to know exactly where you’re at and what your options are.
  4. Seek professional advice!  There are a few professionals that you should contact the moment you recognize that you may be in trouble: a good Phoenix Realtor, an attorney, your accountant, and the loss mitigation specialist at your bank.  Each of these professionals can provide targeted advice to help you make the right decisions for your particular situation.  It is critical to know your rights and the options that are available to you at every stage of the process.
  5. Call HUD!  Did you know the US Department of Housing and Urban Development offers low-cost (sometimes free!) counseling for distressed homeowners?  Why not let a knowledgeable HUD Counselor discuss your options with you?  Call (800) 569-4287 to reach HUD.
  6. Pare down your budget!  Take a close look at your household budget for miscellaneous expenses that might be pared down or even eliminated.  Do you really need that subscription to Netflix?  Or the premium cable TV subscription?  Several small reductions in your budget can make a huge difference in your ability to make payments on your home.
  7. Increase your readily-available cash!  Brainstorm on ways you might be able to increase your monthly household income and/or contribute to your savings.  Is a 2nd job possible?  Can you sell the quads or the boat to cover the next few months’ worth of payments?
  8. Beware!  When your lender sends you the 3rd notice that you’re delinquent on your house payment, it also files a Notice of Public Default.  The Notice is a public-domain filing that notifies those who look for it that you’re behind on your payments and at risk to lose your house to foreclosure.  Some companies, both ethical and unethical, will approach you with options to prevent foreclosure.  So-called foreclosure prevention companies will charge you fees to negotiate with your lender, which you may be able to do just as successfully on your own after consulting with a HUD counselor.  Another common scam is for someone to approach you with the promise of stopping foreclosure action on your home by having you sign the home over to them and becoming a renter.  Some services are ethical and above-the-board, but many are not.  In general, if someone asks you to sign your house over to them and lease it back as a tenant, it means you have enough equity in your home to be able to sell it through traditional channels or to figure out a workout with your lender.  In the worst cases, your property could be ‘given’ to the scammer who then sells it out from under you.  If you decide to work with a foreclosure prevention specialty company, be sure to review VERY CLOSELY any documents that you’re asked to sign.  Even better, have them reviewed by an attorney or a trustworthy Realtor.

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