Does anyone know at what stage you can get out of a foreclosure with other financing or is it possible.
A friend has had his home advertised 3 times in the paper and a sale date set.
They think that FHA might come to their rescue— is this a pipedream or can it actually happen???
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Replies
All states are different in their handling of foreclosures and auctions.
In La. the debtor can pay the judgement amount at anytime prior to the sheriffs sale.
The debtor can also bid on their own property--cash within 24hrs- or hi bidder will have a judgement for costs for delay levied against him.
Any bankruptcy filing immediately delays a sale---- Feds trump everything.
As far as the FHA rescuing them, I'm unsure. But I would think very possible in this mortgage mess.
Is he being a deadbeat? Or is he paying anything while he's going thru this mess.
I'll bet a majority of defaulters stop paying when they see foreclosure coming and milk the system to stay in the house as long as possible for free.
When a property is seized in La. nobody gets put on the street. After the property is adjudicated, the new owner can toss em.
Fastest one I've seen took over 9 months.
They will be seeing a lawyer on Tues next week to try a Bankruptcy filing, but the sale is scheduled for the 28th.
Doesn't seem like time enough to get a filing done.
Doesn't seem like time enough to get a filing done.
Plenty of time.... might just be avoiding the inevitable like Tom said.
Creditors can't seize your house in most states.... but your mortgage holder sure can.
A lot of new credit and bankruptcy laws in the past couple of years. Bad news to go thru bankruptcy prior to foreclosure, wait till after the judgement..... at least that's what I heard at the Tavern. ;-)
Someone more versed in the subject might chime in.
Here, the final action is a sale on the courthouse steps. Few years ago I had the attorney hired, the sale set up, all advertising done, and got a payoff in certified funds at 3 PM the day before the 10 AM auction. And no, I didn't go to their office. They came here.
Promisory notes always (in my experience) require the borrower to pay all collection legal fees. So in addition to my principal and late fees, the person in arrears also had to come up with substantially more to cover the foreclosure costs.
FHA insures mortgages. I don't see this happening.
The woman I held the mortgage for, and tried to work with her financial problems for 2 years prior to foreclosure, refinanced with a shark who required a "deed in lieu of foreclosure" signed at his closing. When she missed the first payment, the house was his. 75% equity up in smoke. She now lives in a public housing project.
Surprised me that it was legal to do that (deed in lieu of), but a recent go-round with Legal Aid (about another mortgage) confirmed that it is, here. Not within my morals, but...
Private financing is likely the only option your friend has. Without substantial equity, little hope. Some large employers will bail out employees with mortgage problems. Sometimes happens with a credit union. My mortgages have all been decidedly "sub prime". Never lost any money, but I'm careful with LTV (loan to value).
Have you got adequate equity that you'd risk?
PAHS Designer/Builder- Bury it!
Tom,
The sale of their property is the 28th.
I doubt if they have access to private financing, but perhaps a bankruptcy filing will slow down the process.
You're correct, that's tight. Private money exists pretty much everywhere and can be had quickly. Generally costs more than conventional and a high LTV would be unusual.
Bankruptcy only slows the process. Which might be enough for your friend if he/she's in a transition period. Otherwise, there's little point.
The one I foreclosed, I offered to allow time to sell and downsize, offered to buy and rent her 1/2, or, suggested a roommate. All rejected. Her co-buyer had died, leaving her unable to service the mortgage. She needed to make a change, and refused. That situation doesn't generally last. Hers was complete, 6 weeks after refinancing.
Hope your friend is more rational.PAHS Designer/Builder- Bury it!
The sale of their property is the 28th.
I neglected to mention another factor. Every auction is an opportunity, including for your friend. Requires lining up financing obviously, but there might be a bargain available.
Knew a guy who bought his delinquent note from a bank, foreclosed on himself, and bought the property at auction. The second note holder lost his 20% stake in the property. Opened my eyes to the opportunity.
You haven't fleshed out the situation much so there's no telling if your friend's making a win out of the auction is a possibility here. Here, high bidder gets the property. Attorney doing the foreclosure gets paid. Taxes are paid. First note holder maybe gets paid. Seconds (and further) stand in line, hoping.
My point: your friend might be able to buy the property at auction for less than the mortgage principal. Doesn't rescue his/her credit, does rescue the house/residence. PAHS Designer/Builder- Bury it!
I've been doing this for 25 years and have never seen a mortgage holder let a property go at auction for less then owed. Learn something new every day.
Only 2 bidders at that auction. The losing (2nd) mortage holder was a spectator, wanting to know how much he was going to lose (everything). He could have bid, I didn't ask why he didn't. Presumably didn't want to own the property (again).
Successful bid struck me as a tremendous bargain. I was advising the only other bidder, who wasn't able to raise enough money. He also lost, after making an ignored low-ball offer before the foreclosure. Dumb move.PAHS Designer/Builder- Bury it!
Tom,
This couple would have no way to pull that off with such short notice.
Their only hope might be a bankruptcy filing to slow down the foreclosure and then try some other manuever.
Thanks for all your insights.
Walter
You're welcome, wish your friends luck.
To risk stressing the obvious: 1) other than the auction, the mortgage doesn't go away without paying it off, no matter what they do 2) if the mortgage was unaffordable before bankruptcy protection, it likely will be after.
Sometimes the best course is to let the property go, unless there's substantial equity of course. That changes everything and indicates they really screwed up several months ago when they had more choices. But can still be leveraged now if they hurry.
My woman kept insisting that Jesus would take care of her. Lottery tickets, I guess. Whatever, didn't work. When I explained her alternatives, she acted like I was trying to take advantage of her. Then she met somebody who really did.
I trust your friends aren't that dumb, particularly if they have much equity. Serious business, mortgages.PAHS Designer/Builder- Bury it!
He has worked with me in the past. When I had my hip replacedment in '06 they refinanced, took cash out to build a porch-- then he went to work with another co. for far less per hour, but more overtime.
I doubt if there is much equity in the home, but a lot of labor he's put in.
Doesn't seem like they have any recourse at this point-- only perhaps to slow the process.
Thanks, Walter
Walter, great that you're interested in helping him. Equity is the difference between current value and what's owed. Not just what's paid down on the principal (almost nothing the first several years of a long-term note). If he's applied his labor wisely, it turns into equity.
If he owes 75% of current market value, he has 25% equity. Then (depending on how many dollars that is) there's potential for leveraging his holding. Granted, this isn't anything you go to a normal lender over. I've done well for myself, and borrowers, by ignoring standard qualifications and focusing on equity.
If it's substantial, avoiding both a foreclosure auction and bankruptcy should be very attractive. Clearly, would cost him some of his equity/future earnings but I'm confident that there is local potential if he beats the bushes enough.
I'm not the sharpest tool in the shed, but I can tell the difference between a 5% bank return and 10-12% potential of a low LTV mortgage. Or perhaps shared ownership. Or ... Limited pretty much only by ones imagination. Just needs to be a good deal for both parties. Totally dependent on equity.
Without that, not much to explore. Sometimes a trip to Legal Aid is fruitful. They've seen it all. PAHS Designer/Builder- Bury it!
My grandparents house almost went into forclosure after they died. by waqs saved only a few days when someone bout it. I think that as long as it is not forclosed you can still save it
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