Las Vegas Real Estate Foreclosure Alternatives and Resources

This blog is a compilation of information related to foreclosure options in an effort to help people facing the possibility of foreclosure on their home. Many people do not know or understand what their options are when it comes to the possibility of loosing their home. I hope to help anyone who would like to learn more about how to stop their home from going into foreclosure and the options they may have to avoid it. This is not written to be a complete and comprehensive document on the subject only a starting point and guide to head in the right direction. I hope you find it helpful.

These are the basic options available with a brief description:  

A. Do Nothing– Let the mortgage rate adjust and the payment increase. Read your note (the lenders documentation you signed when you purchased the home) to find out if your mortgage interest rate adjusts, what the interest rate will adjust to, when it will adjust and how it will affect your payment. If you cannot afford to make the monthly payments the home will ultimately be lost to foreclosure at auction. Future creditors will ask if you have ever been foreclosed on. Credit reports will disclose this information.

B. Payoff/Refinance– Obtain a new loan or refinance the property. Identify if the current loan has a prepayment penalty for paying off the loan within the current time frame or within the time frame since the loan was first originated.

C. Reinstatement– Paying off all the amounts owed to the lender to make the loan current. This may include not only back payments but also interest, late fees, taxes, attorneys fees and possibly more.

D. Loan Modification-Renegotiate your loan before or after the rate adjusts with the current lender. Negotiate the interest rate down from where it is or where it is going. Negotiate a fixed rate loan and or the term of the loan over a longer period like 35 or 40 years vs. 30 year. Call your mortgage company and ask for the note modification or home retention department and will most likely work with you. It is possible they will put you in a new mortgage with no fees. If you would like we can help you with this process and there are references contact information below,  just call.

E. Forbearance– Call your lender. They may consider allowing a temporary payment reduction.

F. Short Refinance – Although rare, in this case the lender agrees to forgive the difference between what you owe on the property and what the home is currenly worth. A more complete blog on this can be found at Bankrate. 

G. Partial Claim – Lender may loan borrower a second loan on the property for the amount that settles the back payments, costs and fees associated with the borrower being behind in the loan payments.

H. Deed in Lieu of Foreclosure – This option gives the property back to the lender instead of forcing the lender to foreclose on the property. The lender may require that the home be in good condition and current on mortgage payments and taxes. Most new loan applications will inquire if this has ever happened to the borrower.

I. Sell the property for maximum value. Have the property in the best possible condition and price it to sell. Pay off the debt and retain any equity derived from the sale.

J. Sell the property Short (better than foreclosure or bankruptcy). This occurs when the property value is less than the amount owed on the property when combining the first mortgage, second and potentially the third mortgage on the property. A good real estate agent who knows how to handle short sales will help his client through the process by helping with the following for his clients.

    1. Guide the homeowner through compiling all the related documents needed. Identify exact loan balances, delinquent mortgage payments, Home Owner Association payments, possible judgements and/or liens and prepayment penalties.

    2. Coordinate a written authorization for the Realtor and title company  to speak to the lender(s) on their behalf.

    3. Contact the title company to request copies of liens/judgements, Deeds of Trust and Notices of Default if applicable against the property. Carefully read the documents identifying the type of loan and any possible additional charges connected to the loan.

    4. Contact the lenders (first, second and third mortgage holders if applicable) loss mitigation or short sale department. Ask them for approval to sell the property as a short sale. Identify what documents they will require to review the loan for a short sale. Identify what their turn around time is and request those documents be faxed as soon as possible. Identify the maximum amount of closing costs that the lender can be charged. Take extremely good notes.

    5. Compile and forward the documentation that is required by the lender(s) back to the lender(s).

    6. Compile the documents for the title company.

    7. Negotiate with the buyers and the lender(s).

    8. Continuous contact and communication with all the parties involved in the transaction. Terms of the sale can be changed by the lender(s) during the escrow period.

K. Foreclosure – Notice of default filed. Because this is a matter of public record people will be calling, letters will be received and people will be knocking on the door to discuss the sale of the property. The lender will get more insistent about receiving payment on the outstanding loans. The process will take 3-4 months before the homeowner is evicted from the property. The homeowner will loose the house.

L. Bankruptcy – This option can liquidate debt and/or allow more time.

  1. Chapter 7 – Completely liquidates and settles personal debt.

  2. Chapter 13 – Coordinates a plan for payments to be made toward paying off debts within a specific period of time (generally 3-5 years).

For additional information about bankruptcy I suggest going to the blog of Darren Welsh our General Council at Prudential Americana Group, Realtors at http://ameglegal.wordpress.com/ . He offers more a more detailed explanation and resources.

We want to help anyone who is in this situation that needs help and advice. This is a difficult process to go through and we want to help make it as smooth as possible for those who need and/or want it.

Additional resources referred to me by Aaron Gordon (who also has a great blog) are:

Homeownership Preservation Foundation hot-line at 888-995-HOPE.

Home Retention Departments by Lender

Web site designed to help people stay in their homes by Moe Bedard .

These are some very knowledgeable local contacts that can be very helpful.

Anita Krikes – First Horizon Home Loans Akrikes@firsthorizon.com or 702-795-0774.

Mickie Salgado – Equity Title Company MSalgado@EquityNv.com or 702-835-0777

Joe Laliberte – Prudential Americana Group, Realtors Joe@JoeLaliberte.com or 702-499-1747

JoeLaliberte or OurLasVegasRealEstateAgent or TheVistasHomes

I am continuing to research this topic and will continue to update this posting as I get additional information.

Las Vegas & Summerlin Real Estate Mortgage Resets

In my past post I discussed how the new tax law could help homeowers that are forced to sell their home for less than what is owed on it because they cannot maintain the payments after the loan has adjusted. This post discusses the dollar amount and approximate number of loans that will be effected nationally. The following information was forwarded to me by a representative of a local lending institution. It illustrates the total dollar amount of loans that have adjustable rates that are going to be adjusted by month nationally in billions of dollars. Next to the dollar amount I estimated the number of loans that it will effect.

2007                    

January  $22 – 73,300

February $25 – 83,300

March  $35 – 116,600

April $37 – 123,300

May $36 – 120,000

June $42 – 140,000

July $43 – 143,300

August $52 – 173,300

September $58 – 193,300

October $55 – 183,300

November $52 – 173,300

December $58 – 193,300

2008

January $80 – 266,600

February $88 – 293,300

March $110 – 366,600

April $92 – 306,600

May $76 – 253,300

June $75 – 250,000

July $50 – 166,600

August $35 – 116,600

September $26 – 86,600

October $20 – 66,600

November $15 – 50,000

December $17 – 56,600

Assuming there will be some percentage of homeowners who are not comfortable with the new payment that occures when their home mortgage adjusts, and that some percentage of those homeowners owe more on their home than they can now sell it for, they will have two options. One to obtain approval from the lender to sell it for less than what is owned or two to allow the lender to foreclose on the home. If you believe these numbers and this trend then I interpret this information as an indication that the short sales and foreclosures will continue to be a driving force in the real estate market through the end of the year.

If you find yourself in this situation I have a program that can help. Call me at 702-499-1747 or visit my web sites listed below. I want to help you.

Las Vegas Real Estate

Summerlin Real Estate

The Vista’s Real Estate

Tax Relief on Foreclosure of Las Vegas Primary Residences

This is a follow up to the last blog posting I made and another positive step toward the recovery of the real estate market. As stated previously a new law was passed that according to the Las Vegas Review Journal, will enable foreclosed homeowners to avoid owing federal income taxes on any debt that was forgiven when their home was seized and sold this year.  

On December 14, 2007 Congress has passed legislation that can save many foreclosed homeowners tens of thousands of dollars in tax relief  ( see Review Journal Article of December 19, 2007 ). On December 19, 2007 the President signed the bill and it became law (H.R. 3648: Mortgage Forgiveness Debt Relief Act of 2007 ).

What this means is that if a homeowner is forced to sell their home for less than what is owned on it, and the bank agrees to accept less that what is owned on the home, the homeowner may no longer be obligated to pay taxes on the difference between what they owed on the property and what they sold it for. In the past, if a homeowner purchased a property at the peak of the real estate market for $300,000, put 10% down ($30,000) their loan would be $270,000. If the market went down and they were forced to sell at $250,000 they could be obligated to pay tax on the difference between $270,000 and $250,000 because it was a relief of their debt. Now under specific guidelines this debt may be relieved. Some of the specific guidelines are that the property must be owner occupied for some period over the past five years and not an investment property.  

This law will also have an effect on those homeowners who have adjustable rate mortgages that have adjusted and they find the payments to difficult to maintain and the lender forces foreclosure.

Federal Housing Administration Modernization Act

This is the response to me from  Senator Harry Reid updating us on what the Senate Banking Committee and Congress are doing related to the national and local real estate markets and specifically FHA backed loans. I thought you might find this interesting. Also note that you can visit his web site (www.reid.senate.gov) for additional information and updates. As you can see, not only are they addressing real estate and lending concerns but our representatives are assessable and respond to your comments.

Mr. Joe Laliberte

Thank you for contacting me regarding the FHA Modernization Act (S. 2338). I appreciate hearing from you. 

The FHA Modernization Act (S.2338) was reported by the Senate Banking Committee on November 13, 2007. This legislation is designed to bring added flexibility to the Federal Housing Administration so that more American families will have more options for safer mortgage products. It lowers the down-payment requirement for FHA-backed loans and also raises the loan limits for FHA insurance eligibility, thus increasing the availability of safe, FHA-backed loans in the marketplace. These changes should make the FHA program a better option for both new homeowners and those borrowers looking to refinance their mortgage.

 I am committed to providing needed relief to struggling homeowners impacted by the recent turmoil in the housing market.  You might be interested to know that I called up the FHA Modernization Act for a vote and the measure passed in the Senate overwhelmingly on December 14, 2007 by a vote of 93-1.  As this or similar legislation moves through Congress, please know that I will work hard to protect current and new homeowners in Nevada. Again, thank you for taking the time to share your thoughts with me. For more information about my work for Nevada, my role in the United States Senate Leadership, or to subscribe to regular e-mail updates on the issues that interest you, please visit my Web site at http://reid.senate.gov. I look forward to hearing from you in the near future. 

My best wishes to you.

Sincerely,

 

HARRY REID

United States Senator

Las Vegas Subprime ARM Freeze

This information was forwarded to me so I want to post it in the event that it may apply to you or someone you know. 

After weeks of meetings between Treasury Department officials, mortgage lenders, and Wall Street firms, the Bush administration today announced that an agreement has been made to “freeze” interest rates for up to five years on certain sub-prime adjustable rate mortgages.

According to the New York Times, the goal of the President’s plan is to convert as many sub-prime ARMs as possible into “more sustainable loans.” However, the freeze applies only to borrowers who:

• Took out their loan between January 2005 and July 2007 and whose rates are set to increase between January of 2008 and July of 2010; and
• Have less than 3% equity in their homes; and
• Are current on their payments (or no more than 60 days behind); and
• Are able to handle their current lower rate, but will not be to handle a higher payment.
  

Analysts estimate that the plan will help between 240,000 to 250,000 borrowers.

The freeze is a voluntary agreement on the part of lenders, so no legislation is required for this plan. Analysts note, however, that congressional approval would be necessary in order to increase current FHA loan limits.

I hope this may be of help to you or someone you know. Call me if I can be of any assistance.