With the current real estate market being the worst in years, many people find themselves “under water” in their own homes.  In other words, you owe more than your house is worth.  What steps you take depends largely on your desire to remain in the property as well as your general financial health.

In the real estate boom of the early 2000’s many people, myself included, were buying homes on speculation hoping that the prices would continue to rise double digits every year.  Well that dream is over and if you bought a home for speculation, especially in the so called hot markets, you probably have divested yourself of the property or the bank has done it for you.  So for this article, let us concentrate on those homeowners that bought a house as their primary residence.

The first step in avoiding any foreclosure is to contact your mortgage company.  In a lot of cases you will have a hard time finding out exactly who your lender is because the loans have been sold to third party investors or the government (Fanny Mae-etc.).   Start with the lending institution on your original documents (more about original documents later) and follow the trail.  It will take some perseverance but eventually you will get there.

Okay, so now you found your loan holder.  What do you do next?  Retaining an attorney is a good idea, but if you are close to foreclosure you probably don’t have the money to do that.  That makes you your own attorney.  The first step is to find the person that can re-negotiate your loan and ask if there are any programs that can help you remain in your house.  There are actually quite a few loan modification programs available today and you may qualify for one.  If you do and that makes your monthly payment doable, case closed, you win.  However in real life that is not often the case and you will need to proceed to step 2.

The next step may be just stop making all mortgage payments and wait until you get evicted.  I know that sounds ridiculous, but sometimes it can be two or more years before you are actually forced to leave your house.  Just before the sheriff takes your property you may want to play your last card (remember your original documents?).  You can force the lending institution to produce the original mortgage documents which they may have misplaced as the loan was sold multiple times.  This will greatly improve your negotiating position and can let you stay in the house for a few more months.  When you get to that point you might want to consider your final option, selling to a third party at a loss.

While the prospect of selling something at a loss doesn’t sound all that appetizing, it is inevitable in this situation.  You might want to contact a third party such as 3-Guys or other people that buy distressed properties.  I know you are thinking “how is this going to help me?”  The answer is in several ways.  First, you may not have the money to move.  In some cases we have persuaded the bank to front the moving expenses just to get the people out of the house.  In other cases we have helped move people after securing the property from the bank.  Moving under these conditions is always better than being evicted and it gives you some control over when you move.  Another advantage of taking this avenue is that your personal belongings and furniture won’t end up on the street or sold a sheriff’s sale.  I realize that this solution doesn’t seem great but sometimes it is the only one.

There is only one solution we haven’t covered:  WIN THE LOTTERY!!!!!

Are you in financial trouble and at risk of losing your home?  If you are in the Pittsburgh, Pennsylvania area  3 Guys Home Makeovers may be interested in purchasing your home.  Give Lance a call at 412-398-2314 and discuss it with him.


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