I was fortunate to meet with a homeowner in Newport News who was in danger of foreclosure on her home to discuss how I might be able to help. We met at a point where there was still time to still be able to do something about her situation before the actual foreclosure was scheduled to happen. The homeowner was a single mom dealing with severe financial constraints through a contentious divorce. She had just received the foreclosure letter in the mail and, with what was going on with her life at that time, she was at a loss on what to do about it.
The good news for her was discovering she already had a substantial amount of equity in her home. We worked through a few solution-driven scenarios pertaining to her situation. This homeowner wished to move out of the Hampton Roads area and needed funding in order make it happen. We worked out the number scenarios showing what she could walk away with to start over where she then decided her best option to was to get the house sold.
On the client’s behalf, The first thing I did was to reach out to the mortgage company where we first negotiated to stop the foreclosure proceeding and then allow the homeowner a bit of extra time to get it sold. Getting the mortgage company on board to stop the foreclosure wasn’t easy. It took a lot of perseverance and consistent calling to develop a working relationship with the lender to allow me to help the client.
Due to the hot housing market at the time, I was able to secure an offer over our asking price! We were quickly able to get the home SOLD and the owner now had the financial means to move to another location where she had better family support. A big plus – we were also able to avoid the situation from destroying her credit rating further from having a foreclosure on her record.
Beware of the Sharks!
While this was a success story for this particular homeowner, unfortunately this isn’t a typical case. Most foreclosures come from a tsunami of personal problems that can include loss of job, medical and/or mental heath issues, drug, alcohol or gambling addictions, grief/death, divorce or a combination thereof. Many at this point just give up. It’s amazing to see that many people refuse to acknowledge that a foreclosure is a real possibility for them and ignore the notices.
When a homeowner receives a notice of foreclosure, the options they have will depend on how quickly they reach out to the mortgage company about it. One thing a homeowner should NOT DO is ignore the foreclosure notices received! The sooner you acknowledge the problem, the more time available to you to be able to do something about it in your favor.
I have experienced observing and understanding the foreclosure investor market. You will also start to receive contacts from investors about the same time as you have received your first foreclosure notice. Tread carefully! Most all only have their own monetary interests in mind. Despite what they may tell you – there is nothing in it about yours! Especially if they know there is equity available in the home. It’s hard to fathom, but I have seen houses go into foreclosure with as little as $10K left on the mortgage. You should see the auction bidding frenzy that happens on courthouse steps when that happens!
Be extremely careful of being approached with a solution that sounds too good to be true; isn’t geared towards actively getting your house sold in time; or if warranted, discussing a short sale solution. Even if they do, they are typically not a licensed REALTOR that can perform this type of assistance and it may be a stall tactic. Despite what they may be offering and hoping you’ll bite on, at minimum they may already have an advantage over other potential bidders by observing the condition of your home if you’ve let them in the door. Remember, foreclosure auction purchases are for as-is properties. A big fear factor at auction bidding is not knowing the interior condition of the foreclosed home to know where to throttle a bid and risk losing money.
I’ve seen investors tell a homeowner that they’d cover the defaulted amount and work with them to get out of their situation – too good to be true. After gaining their confidence, they then actually do nothing and allow it to still go to foreclosure. Guess who purchased the home at auction with insider information they gained from knowing the property over the other bidders? What’s worse, that investor will probably be the same face you’ll see at your door with the help of the Sheriff’s department to come and evict you.
A short sale is a viable option for avoiding a foreclosure when the current market value of the home is lower than what’s still owed on it. The common term for this is being “upside-down” on a mortgage and happens depending on an up or down cycle in the housing market. It happened during the Great Recession of 2007-2009 and, from the current extraordinary home prices combined with rising interest rates, we may be on the cusp of another going into 2023.
However, short sales are a whole new set of hurdles in communication and cooperation with the lender for attempting to first stop the foreclosure proceedings and then negotiate the sale terms. Mortgage companies would much rather work with a short sale scenario over a foreclosure, however they are typically a lengthy process as you are dealing with an agent employed by or contracted with the bank holding the note. It creates a communication bottle-neck trying to get decisions made in a timely manner to complete the sale.
It Starts With a Phone Conversation
I live by and have built my reputation with the slogan “Putting Clients First”. If you’re facing foreclosure, let’s make it clear that I can do nothing for you if you have let too much time pass since receiving your first foreclosure statement and you have not bothered to start by contacting the lender. Although working with investors is also part of what I do, my focus is only to discuss helping you sell your home before the foreclosure – if there’s still time – or assist in setting up a short sale in the role of a REALTOR. Call me only if you feel you are still in a position to be able to help yourself start over.