Before taking the step to foreclose on your home, you should make an informed decision. This means knowing not only the pros and cons of foreclosing on your home, but also, the pros and cons of other possible options--such as a short-sale, a deed-in-lieu of foreclosure, loan-modification, loan forbearance, etc.
At the Law Office of Linda C. Garrett, a Solano County, California-based, online virtual consumer, bankruptcy and family-law practice, I receive numerous inquiries from callers regarding foreclosure issues. This blog post is designed to help the reader make a preliminary determination whether foreclosure is an option for them.
Below is a list of basic questions you should consider in order to determine if foreclosure is right for you
1. Is Your House Under-Water?
In layman's terms, this means that you owe more on your home than what your house is worth. If you want a quick valuation of your home, go to Zillow.com It's free! If you have equity in your home, meaning you have more value than debt on the house, then you have equity--and your home is not under-water.
2. How Many Loans Do You Have Against Your Home?
Typical loans against your residence are a first, a second and a third mortgage (usually a home-equity line of credit ("HELOC"). The more loans you have, the more issues you need to deal with, e.g., possible deficiency judgments from the lender(s) and taxation issues by Uncle Sam.
3. What Is Your Unique Financial Situation?
Determining your unique financial situation is many times difficult, but vitally important in determining the various options available to you (and not available to you). For instance, a person who has no income has little chance of receiving a loan modification from their lender whereas a person with some income may have the option of either doing a loan-modification, or a short-sale . And while filing a Chapter 13 might sound like a good idea--it's not always the best solution for an individual--if, for instance, they are unemployed and have no money to pay their mortgage--even a modified payment. And add to the mix--understanding how bankruptcy laws can and cannot help under your unique financial situation.
4. What State Do you Live In?
Depending on what state you live in, foreclosure can take a long-time to complete (in judicial states) or take as little as four months (non-judicial states). So, if you live in California, it is vitally important to know that your foreclosure process can be as short as 4 months--from start to finish!
The goal of this particular blog is not to address all issues and concerns in connection with walking away from your home, but rather, to start the process of opening up a healthy dialogue with a qualified attorney on this issue and to help you realize that no two situations are the same--even if they look identical from the outside looking inside. Below is a list of links to helpful resources. If you do nothing but one thing, at least consider purchasing a good and current book on the subject of foreclosures. Nolo Publishing sells a great book called the Foreclosure Survival Guide. It answers all the questions you might have (and not know you might have) on the subject, including answering questions about deficiency judgments and taxation issues--two issues most people don't understand until it's too late. It sells for about $24.99. It's well worth it. The link below is a direct like to the book.
In sum, it is very important to make an INFORMED decision before taking that big step, understanding not only the benefits of your decision, but equally important, the consequences of this big step!
Since coming out in March 2009, The Making Home Affordable Modification Program has come out with new laws and updated. Therefore, the statements made on this blog are reflective of the information and law available at time this blog was written (August 2011). You are directed to go to the Making Home Affordable Program website now and in the future, to review of the most current law and programs available--or soon to become available to the consumer.
As you can see, there are many questions you need to ask yourself before you take that next step. I have included few website links for you to visit in order to help you along the way in making this difficult decision:
1. Nolo's Foreclosure Survival Guide: An easy-to-read book that answers the majority of questions regarding the pros and cons of foreclosing on your home.
2. HUD--to speak to a HUD-approved counsel for free about your situation (.
3. National Association of Consumer Advocates to locate a consumer attorney in your area--specializing in foreclosure, loan modifications, and other mortgage-related issues.
Copyright © 2011 by Law Office of Linda C. Garrett. All rights reserved.