Dave Dinkel asked:
The most common issues a homeowner faces in a foreclosure are his getting too much confusing and conflicting information, and his inability to make timely decisions. His indecision is reinforced by information from numerous sources including real estate investors, the lender, realtors, mortgage brokers, and bankruptcy attorneys. All of these individuals have a vested interest in a specific resolution to the homeowner’s problem, which may not be the best solution for him.
The real estate investor wants to purchase the home and quickly resell it for a profit, or rent it. Homeowners in foreclosure are often not in a frame of mind of thinking logically, and can make poor judgments especially if the information they get is inaccurate. This opens the door to abuse by investors and a number of states have enacted regulations effecting how investors deal with people in foreclosure. A homeowner in foreclosure should get legal advice from an attorney, and financial advice from his accountant, before signing any documents.
The lender’s representative in the loss mitigation department can have as many as 350 – 500 foreclosure cases working at any given time. He will always do what is best for the lender and is not allowed to give legal advice to the homeowner. Therefore, the lender’s representative is working to get your home if it has equity in it. Yes, the bank wants your home if it has equity! This is contrary to what investors and realtors will tell you. Otherwise the representative wants you to reinstate your loan so it comes off the lender’s list of delinquent properties.
Realtors® make money by selling your home. However, if they can’t sell it timely you could lose your home to foreclosure. Never sign an exclusive seller’s agreement based on their promise they have a buyer. Sign only a buyer’s agent commission agreement for 30 days if they bring you a pre-approved buyer. Signing an agreement to pay the buyer’s agent keeps unscrupulous agents form doing what is called “buying the listing” or telling you they can sell it at a price that they know is too high, and later will have you reduce the price for a myriad of reasons. If you are in foreclosure, you can’t afford to play in the market trying to get the highest possible price, especially since your name is in the public record as being in foreclosure – the buyers know you will lose your home if you don’t sell!
Mortgage brokers only make money if they can get you refinanced. However, if they are not able to do so, you could lose your home. It is highly unlikely that you will be able to refinance or get an equity line once you are late on your mortgage payments. Why should another lender take a chance on getting your home in foreclosure? If you decide to sell your home yourself, do not allow anyone to screen your calls because you are doing advertising for someone else and they may convert your perspective buyers into clients for purchasing another home.
Bankruptcy attorneys only make money if you file for bankruptcy, whether you are successful or not. The problem with filing a Chapter 13 bankruptcy is it will only temporarily stop your foreclosure and only the “reinstatement amount” can be carried through and paid off during the bankruptcy. The entire time your mortgage payments must be kept current. If you get behind, the foreclosure will continue and you will still owe the reinstatement amount in the bankruptcy. The real tragedy is that you will have the bankruptcy on your credit report for 10 years versus seven years for a foreclosure. The bankruptcy will also remain in the public records for up to 20 years in most states.
Each of these professionals has a monetary incentive to “help” with your foreclosure, so it is in your best interest to be open-minded but also informed about any decision you make. Unfortunately, it is often the last or best salesperson that sways the decisions of the homeowner. The homeowner must become informed about the foreclosure process and his rights and options. This way he can make choices that are in his own best interest whether he keeps or loses his home.