When one examines the foreclosure market, all too often an area that is ignored is that of purchaser fraud. There are, as with any situation when large numbers of people are at risk, a number of nefarious individuals who get pleasure, as well as money, from preying on the unfortunate. In this case, those being preyed upon are the homeowners facing foreclosure. There are many ways for someone planning to take unfair advantage to do so, but many of the schemes involve the schemer offering to solve the homeowner's problem by new financing for the property or by taking title on a "purely temporary" basis in exchange for the schemer's supposed plan to "help" the homeowner. Unfortunately, "purely temporary" becomes 'permanently', and the only one helped is the slimy individual who just pocketed the ownership of the property.

If you are a property owner facing default or a possible foreclosure, remember a few things:
1.) If it seems to good to be true, it probably is.
2.) Some offers to buy may, in fact, be legitimate and fair--just enlist the aid of a Realtor to represent you and protect your interests.

For the legitimate investor reading this, there is nothing at all wrong with buying the property that may be at risk of being foreclosed upon. Just do it for a fair price relative to the market where the property is located. Also, before you proceed on this type of property, do your homework. Is the foreclosing mortgage the first or a subordinate loan? Which one it is can make a huge difference. Also, check with your Realtor and your attorney on the law on buying a defaulted or foreclosure-endangered property. A number of states are working on legislation to place limits on exactly what can be done by buyers trying to take what the state legislators perceive as unfair advantage of the homeowner in such circumstances. If such a law exists where you are, it may limit your options on buying such property or severely limit your desired upside for the investment.

'Short' Sales

Welcome back! We took a few days off for the holidays: visit with family and friends, celebrate, yada yada...


Anyway, another thing one hears more and more these days is the 'short sale'. This is another variant of the default/foreclosure crisis that is sweeping the nation these days. What the term means is that the homeowner who is having trouble meeting the terms of the mortgage decides to sell the property. There is only one problem--the value of the house is less than the amount for the mortgage(s). In order to accomplish the sale, the seller has to persuade the lender(s) to accept less than the amount owed on the debt at close of the sale. The lender will thus end up 'short', hence the name. This is somewhat troubling to the homeowner, but may be the only way to avoid foreclosure in some cases.



However, a few things that you should be aware of before proceeding on a 'short':

1.) Doing a short sale will not salvage your credit rating. It'll still be less than pristine when you are done--but not as bad as if you hang on until the lender actually forecloses;

2.) By doing a short, you will have an extra hit on your income taxes for the year; this is because the amount that the bank agrees to accept as a short and final payment means that it has forgiven the money it's not going to receive as part of the payoff. The IRS regards forgiven debt as normal income and it taxes it as normal income in the year it is forgiven. So, after you've removed yourself from your pending foreclosure by going short, you can expect to receive a Form 1099 at year end from the bank to include with your income tax return. Not great, but at least you can now move on from your foreclosure worries until you're back on your feet again.

Hello, again! I hope you're all finding this blog on foreclosures helpful. I wanted to provide some info to anyone who MAY be facing problems with their mortgage, but till has a little time before they actually face foreclosure. There are a number of credit counseling services, private and government that can offer advice and assistance in situations where you may be in default or worried about the possibility of foreclosure. As of December 6, 2007 there is a new government service that you can call at (888) 995-HOPE. It is supposed to assist homeowners who may find thewmselves in financial difficulty with their mortgage. It's new, so it may be too soon to tell how well it works.
Separately, both the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies both have housing counselors to help you evaluate your situation and options that may exist. The Housing and Urban Development (HUD) also has a number of counselling agencies it will recommend if yhou call: (800) 569-4287. If your loan is a VA loan, call (800) 827-1000.
Some private counseling or assistance agedncies are: ACORN [check them online for your own state's contact info]; Neighborhood Assistance Corporation of America (also online;they do both counseling and can arrange low cost loans in some cases); and contact your own state government's housing deparftment, as many have similar state-supported programs.
Good luck and we'll talk again soon!

Foreclosure News

Greetings!

Not only is that our wish for you in this Holiday season, but we also want to welcome you to this new blog on foreclosures. With all that's been happening this year, and appears to be continuing for the foreseeable future on the subject, we will regularly be updating this blog with what we hope will be both timely and helpful information to all of you out there. Whether you are currently facing foreclosure, getting nervous about the possibility or just trying to get better informed on the subject, visit us as often as you'd like--hopefully, you'll find our info of value.



In addition to the 'normal' areas of foreclosures, we'll pass along info and advice on how to invest in foreclosed properties, both from the banks that have taken them over and from the proverbial 'sale on the courthouse steps'.



Also, if you have comments, or would like to contact us, please feel free to do so. We'd welcome the opportunity to discuss the subject with you.