As an individual, with a bit of education and know how, anyone can assist those caught in pre-foreclosure or foreclosure to keep their homes. There are opportunities for forbearance, reinstatements, repayment plans and loan modifications. They can try to refinance through a private lender. There are many ways to exhaust keeping a home prior to having to sell. No matter what, there is no reason that a home should actually be foreclosed.
You can advise the family in many different ways.
First explain to your client that they should not avoid the problem. The more time they wait, the harder the situation will become and the more likely it is that they will lose their home.
Express to your client that the lender does not really want to foreclose. Lenders are in the business of lending money and not in the business of owning homes.
As a person helping those in foreclosure, you want to ensure that you know and understand the rights of your client. Be sure to contact your State Government Housing Office and ask as many questions as possible to become as educated as possible in your particular states laws.
Sit down with your client and discuss their other assets. Can they use other properties, cars, jewelry or other assets to help pay for their home?
Research all options that will help you in keeping your home. Let's discuss some options that may be available to you. Some possible ways you can assist are:
Repayment Plan: Your client repays what is behind and promises to stay caught up. This is usually when the loan is 16-30 days late.
Forbearance: A forbearance isn't for an indefinite period; it might be for one or three or six months, and after that, your client will be expected to make full payments on time.
In most cases, they will be expected to catch up within a year or 18 months.
Loan Modification: A loan modification is similar to a refinance: The lender agrees to alter the loan, but with few or no fees. The lender might reduce the interest rate, change the loan from an ARM to a fixed-rate mortgage, or raise the monthly payment by a few dollars so your client can pay off the entire loan, including the past-due amount, by the loan's original end date.
Deed In Lieu Of Foreclosure: This option often is referred to as a "deed in lieu." The borrower offers to hand over the deed to the property so the lender can take possession of the house and sell it.
Shore Sale: In a short sale, your client sells the house for less than what is owed. With a short sale, your client makes necessary repairs to the house; pays the real estate commission, taxes and government fees; and give the lender whatever money is left over -- a partial payment.
If after you have tried every way to help a family stay in their home and it is just not feasible then YOU can assist them in selling their home and get paid through short sales, subject to, private lending, quit claim deeds, rent back, and many other ways.
Purchasing the home from the buyer and not allowing the home to be foreclosed will help your client. First, your client will not have a foreclosure on their credit. Secondly, you assist them by providing a final alternative and still be able to keep their dignity. Thirdly, it is a win win situation. You get a great deal and they get a financial burden off of their back.
Some exit strategies might be:
o Flip the property, either wholesale or retail, to a quick buyer or another investor.
o Reinstate the foreclosure (that is, pay off all the back payments, interest, and penalties, and resume the original terms of the loan) and sell the property at retail to a buyer who gets a bank loan.
o Reinstate and sell the property by acting as your own "bank," using owner financing to cover expenses.
o Reinstate and keep the property, then rent it out.
Good luck in your ventures and remember that the ethical investor is always the best investor!
