Tuesday, June 3, 2008

PRESS RELEASE: Forecloser advice for homeowners


Lombard, IL – June 3, 2008 – As Americans continue to see the economy fall, they also see foreclosure rates rise across the nation. According to RealtyTrac.com, Illinois ranks as the 14th highest state with foreclosures. Consumers can sometimes prevent foreclosure on their home before it happens. The non-profit Illinois Association of Mortgage Professionals (IAMP) and the Illinois Association of Mortgage Professionals Educational Foundation (IAMPEF) offer tips for troubled homeowners to consider.

Consumers should be aware of how a foreclosure will have an impact on their credit report. Foreclosure is a negative mark that is hard to erase from your credit history. However, there are steps you can take to avoid the loss of your home. Communication with your mortgage broker or lender will help you navigate through the troubled waters of foreclosure before and after you find yourself facing such a situation. Consumer tips provided by the IAMP and IAMPEF are for informational purposes only and should not be considered legal advice.

Before You Miss a Payment:
· Take out a loan product that makes sense for your individual financial circumstances, and ask your mortgage professional whether an adjustable or fixed rate is best for you.
· Know how much you can afford for a house payment and don’t be talked into more. Mortgage loan applications only take into consideration monthly obligations on your credit report and child support or alimony. Many times, child care expenses, private or college tuition can take up much more of your disposable income than you have left after you commit to a mortgage payment based solely on what your mortgage professional considers. Look at your budget and make sure you can fully afford your new mortgage payments along with your other monthly obligations.
· After you close and move into your house, manage new expenses and purchases very carefully. It takes money homeowners don’t usually put into their budgets to maintain a home. Many new homeowners over extend themselves after they close on their new home which can put them into a financial bind and cause foreclosure.

· Make sure that after you make your mortgage payment each month there is enough money to cover your other expenses as well as put money into a reserve emergency account
· Use the equity in your house in a careful and a sensible manner; for example don’t use money from a line of credit to go on vacation

After You Miss a Payment:
· As soon as you know you are going to miss your first mortgage payment, contact your lender
· If you obtained your loan through a mortgage broker, ask your broker for guidance on the situation
· Cut out any unnecessary expenses and try to trim your budget where you can
· Don’t make any large purchases
· Be aware of “rescue” offers, if it sounds too good to be true it probably is
· Don’t sign any documents before they are thoroughly read and reviewed or if they contain blank spaces
· Work with your lender to determine if selling your house is an option or if there are any other options they can offer to improve your circumstance
· Talk to as many people at the lending institution that you need to in order to find someone that will help you. Write down names and departments.
In spite of your best efforts to bring your mortgage current, sometimes temporary financial setbacks occur. Rather than foreclose, most lenders would rather work out a solution with you. Foreclosure workout plans depend on several factors. Becoming familiar with all your financial options places you in a stronger position when dealing with your lender. Most lenders administer the following specific plans:
· FHA Special Forbearance (SFB): a written re-payment agreement between a lender and a borrower, which contains a plan to reinstate an asset that is a minimum of three mortgage payments due and unpaid.

· Loan Modification: one or more of the terms of the loan are changed to bring the delinquent mortgage current.

· Pre-foreclosure Sale: the proceeds of a sale are accepted as full satisfaction for the mortgage obligation even if it is less than the mortgage balance.

· Deed-In-Lieu of Foreclosure: the borrower voluntarily deeds the property to the lender to avoid foreclosure.

· Repayment Plan: a formal re-payment plan that may include special forbearance and is structured allows the consumer to repay delinquent installments and/or payment advances to bring the mortgage current.

· Assumption: an enforceable "due-on-sale" clause, which is waived to allow a qualified buyer to assume the mortgage of a delinquent borrower.

· Special Circumstances: these are special situations involving natural disasters and bankruptcy where an agreement can be worked out with the lender and the borrower.

· Special payment arrangements: there can be special agreements made in order to allow the borrower to “catch-up” by stretching payments over a set period of time or allowing extra time to make payments on the delinquent amount.

· Interest only payments: a lender or servicer can agree to take interest only payments by waiving the requirement for principal over a period of time to assist the borrower.

· “Short” sale: the lender takes less than what is legally owed, reducing the payoff balance to the agreed upon amount, in order to allow refinancing or sale.

All the above listed items need to be agreed upon by your servicer or lender in writing. Do not hesitate to communicate and seek alternatives if you want to keep your home.

Please understand that the lender does not want your house and will try to work with you. The first thing you need to do after you have received a foreclosure notice, or a Lis Pendens, in writing is to respond immediately. Consumers usually have 20 to 30 calendar days to respond. These 20 to 30 calendar days begin from the date you were served the Lis Pendens notice.
It is also advised that you attend the hearing. The judge will listen to your side. If you don't attend, a sale date will be set for approximately 20 days after the hearing date. If you do attend the hearing, you may be able to get up to 60 days to work out a resolution.
For more information, or to find a mortgage professional in your area, visit the consumer information page on the IAMP web site at www.iamp.biz.


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