Is Foreclosure for You?

Why doesn???t the author contact the three major credit bureaus, the insurance regular of his state and a couple of major lending institutions to ask these questions? It sure would help everyone to understand this more.

Options exist. Commit to a strategic plan for the next 5 if not 10 years. Step 1-Find a roommate or two. Keep rent affordable so they stay, but insist on a credit check and verification of good job stability -credit application, credit report and 6 mo pay stubs. This information stays confidential always. Shred or return documents to them if you don???t choose them. Require first and last months rent upfront and 2 wk to 30 days notice if they move. Put rental agreement in writing. Make sure roommates are on the same page ??? saving money and getting own financials stronger. You don???t share your home with people who are partying or otherwise irresponsible. Step 2 -Find a silent investor buy part (1/4 or 1/3 of ownership in the condo. This money is used to reduce loan amount and paid at the closing of the refinance. This is a lien against the property in second place. The documents are recorded along with the documents for the refinance. Agree to a certain percentage of the profit when resold, or a higher interest rate than bank when able to make payments. Step 4 - Refinance. Borrow directly from a bank and avoid mortgage broker costs. Ask current lender for a streamline refinance (eliminates some costs) even if the foreclosure process has started. Talk to another person or higher up manager. Show the steps that been taken to help the situation. Get advance copies of the closing statements and HUD educational brochure to review at home or with a consumer financial counselor. Step 5- Diligently monitor expenses. Keep a chart or list and update monthly and with each pay check. Cut up all credit cards and close the accounts by phone and letter. Send copy of the letter to all three major credit bureaus. Step 6. Continue to get more money in. Hold garage sales. Take part time jobs. Keep hustling to get $ more in. Make it fun and a game to see how much you can get. Add to your chart. Step 7- Use extra money this way- Start saving up for minimum 8-12 mo overhead as an ???emergency only??? cushion. Simultaneously, pay off all credit card debt fast. It has 18%-24% rates and other unknown fees tacked on to unpaid balances. It may help to knock off one debt at a time. Step 8 - Start saving again. Use this account to make quarterly or semi annual payments to your silent investor. Keep a record. Step 9- Get more job skills. Continually push to learn new ways to increase your salary or get a better paying job. Step 10- Make small milestones for each step and celebrate every one. Do happy dances, go to the dollar theatre, or write a special thank you note to yourself that you tack on the wall. No big party (costs money) or new spending to celebrate. The whole idea of celebration is to reinforce your success in managing your money and your self discipline. Reaching smaller goals adds up to achieving the big goal of free and clear home ownership!

As far as I'm concerned, the American Dream of owning a home was propaganda once started by bankers and mortgage companies. If I have to throw money away, I'd rather throw it away as rent to a landlord who I can see in person and who will gladly take care of all the maintenance, taxes and sewer bills on the place I live in. Plus, I enjoy the flexibility of being able to move around and not be so tied down to one location for years at a time. I hate property maintenance! Most of the landlords I've had have always treated me well. I've never felt inferior to them (unlike a cold-hearted mortgage company). And I've never had a landlord report a late rent payment on my credit report, even though I have been late many times before. Once I was evicted because I couldn't pay the rent for over 2 months, but even that never showed up on my credit report. If you ask me, banks and mortgage companies are the bad guys, because if you don't pay them on time everytime then you are screwed to the wall and your good credit history is over. Most landlords are willing to work with you during lean times, and will almost always cut you some slack as long as they see you aren't trying to take advantage of them. Given the fast-paced/stressed-out society all of us live in, renting is definitely the way to live. I believe owning property is only for those who make well into 6 figures with a LOT of extra time on their hands to devote to mowing grass, raking leaves, worrying over property taxes, etc. etc. etc. For the majority of Americans living from paycheck to paycheck, renting is much easier and less stressful then owning. If you want to build equity, put money in a savings account. It's tax-free and fee-free, plus you'll have access to it anytime you need it. STOP LIVING LIKE A PUPPET-ON-A-STRING IN THE HANDS OF A MORTGAGE COMPANY AND START LIVING YOUR OWN LIFE (WHAT'S LEFT OF IT) WITHOUT ALL THE WORRY AND THE DEBT ASSOCIATED WITH OWNING PROPERTY. IF YOU CAN'T MAKE THE PAYMENTS AND YOU CAN'T SELL IT, THEN LET THE MORTGAGE COMPANY HAVE IT!!! Your life will be simpler with less stress if you rent rather then own. So don't be afraid to rent. The "total" cost of home-ownership has risen to the point that you will end up spending less time and less money in the long run if you rent, believe me. Let it go.

I keep reading article after article about these poor unfortunate souls who are default on their mortgages for houses at which they should never even have considered looking. Since when is it OK to buy a property that is 4.5 times your gross annual income? The rule has always been and always will be that the property should be somewhere between 2 and 3 times your annual income. I have no sympathy for people who don't want to work their way up and just want the very best from the very start. They assume because others have granite and other luxuries, they have a right to it as well. I DO have sympathy for those who bought houses IN THEIR PRICE RANGE and were taken by sketchy lenders. I started with a $96,000 condo 10 years ago when I was making about $55,000 annually. I know that I am unbelievably fortunate to have gone into a field that (after getting my M.Sc. part time while working full time), I've been able to raise my salary to about $120,000 annually. I now have a house with granite and cherry wood cabinets and all the "fixin's" that cost $250,000. This is the house I am planning to stay with and pay off someday hopefully before retirement. And guess what?

This comment is for hjfzm1997 in California. I believe the article said O'Meally was 61 years old, somehow I don???t think the answer for her is getting an extra job, and I did see mention in the article about getting a roomate. It is not always as easy as it sounds to do that. I'm in the same boat as O'Meally right now, I was told my taxes and insurance were included in my monthly payment and found out they weren???t by my insurance company when my annual insurance was due. I think the majority of the problem is the broker or sub prime lender that shafted her in the beginning which left her spiraling out of control. The cost of living is slightly higher in California but the average salary is also higher in California. I currently live in Florida and am from California. I think person commenting from California is making an uneducated assumption of O'Meally's life style. The housing market in Florida has been ridiculous the last couple of years. Houses were selling at twice what they were realistically worth because there were ways to work the numbers. People bought houses way out of their price range because someone ( a professional) told them they could do it. Others refinanced and went with ARM loans, it is just a mess, and now it will affect everyone and the economy. I don't think as a society we should look down on these folks, but try to work together to come up with a solution together. I think the author of this column is making a great start at that. I hope we can all follow his lead.

My fianc?? and I are in the process of buying our first home. It took us a while to finally understand that we had luxury taste without the wallet to back it up. We were delusional. We wanted all brick, 4 bed/2 bath, hardwoods, big yard, and walk-out basement on a private street. Well for our budget, it wasn???t even going to happen. We prayed and asked God where He wanted us to be. We were then able to swallow our pride and instead of paying $220,000+, we were able to find the same exact house with all of our needs/wants/desires and more for $130,000. This was not a foreclosure, as-is or REO. Plus the sellers agreed to make a few small repairs. The only problem is we have moles or voles in the yard.

People need to stop buying more than they need. Where we live which is in STL, people have huge houses and there are only 2-3 people in them. The bank originally approved us for a $200,000 loan and because of a past lay-off, it dropped to $150,000. They wanted us to buy at our limit but we decided to get something under what the bank said we could afford. Also, we applied for the loan based off of ONE person???s income. Just incase it gets tough, which I am sure it will, we can at least make our payments.

You can???t expect anyone to look out for you. You have to have your back. Forget the Jones???; they are barely making it too. I am no longer jealous of those people with the big houses. God help them if someone looses their job.

And for those of you selling your house???we bought this one b/c it was priced right according to the market. Just because you are hoping, or need to get a certain price does not mean your house is worth that amount. Stop listening to these home improvement specialist that say if you put in granite, you will get xxx return on your investment. People are looking for decent affordable houses. No one cares if you put in a pool and put heated floors in the bathroom???.if you are trying to make a huge profit, your house will sit longer than an average home that is priced right. People are trying to give away their 4000+ sq ft homes down here.

I understand all this and I just turned 25. Its not rocket science, gas, crude oil, food, jobs???I wouldn???t dare buy some of these house out here, and its going to get worse.

In February of 2006 why would anybody have a mortgage witha a interest rate of 9.5%. We have not seen this kind of rate fotr years. There is some other factor that caused the interest rate to be soo high. You have a comment that blames the appraiser. Could the problem be questionable credit, and the loss of income not the appraiser

wow, I can't believe I didn't see one suggestion about getting a roommate - she's got a 2 br/2 ba and frankly, she could also get a part time job on the weekends to supplement her income. She sounds like a whiner to me - I live in CA and 225K for a condo is cheap! Get real, and get to it - if you want to live in a desirable location, and you're not rich, you're going to have to work harder. End of story.

The real problem is that most lenders will not help you even if you can make the payments. The issue is in the appraisal. There are 3 factors to consider - the homeowner only controls 2 - their credit and their income..they cannot control the appraised value of the house which will sink or swim the whole deal. This is where lenders are not being flexible. Also, the lenders are not assisting based on the new programs that FHA says they have put into place to help. It's like they want to glut the market or something.

Like many others my family and I are going through this process right now. When we bought the home I made good money and had no problem at all making the monthly payment plus a hundred extra a month put on the principal (the mortage co. was nice enough to take that). In the past two years I have had reduction in income due to layoff and closing. We had some saving but went through that slowly until it was depleted. Like on of the other comments, the mortgage co. would not take a partial payment (unless it was extra going to the prinical), all or nothing. With in a half mile radius of our home there are about twenty home up for sale aswell as ours and we see no hope in sight, nor another home in our future for our family.
It would be nice if things were the way "financially responsible" thinks they should be with a years worth of payment put aside. I would like to introduse him/her to the rest of the country who lives paycheck to paycheck even before buying a home.

I found myself in a similar situation, but at least on a fixed rate loan. I lost my job and knew that I would not be able to make the next month's payment, so before it was even late, I contacted the mortgage company (Chase) to request a forbearance (where they suspend or reduce your payments for a certain period of time) and explained what happened. I was granted a 3 month forbearance with no payments, while I tried to sell the house. I could not sell the house at the price needed to pay the realtor and the mortgage balance, and requested another forbearance, which I was given 3 months additionally, but had to make a half-payment for those 3 months. So basically i was allowed to make only the equivalent of 1 1/2 months mortgage payments over a 6 month period. Unfortunately, I still could not get the house sold, so I requested a deed in lieu of. After they sent a realtor to perform BOA (Broker's opinion of Value I think it's called), her value was about $20K less than the mortgage balance, so they declined to accept a deed in lieu of, but authorized me to do a short sale (broker protected). So I notified my realtor who broadcast that we were accepting offers on the property, we had some ridiculous offers, but had a few that were very close to the mortgage balance. All offers were presented to Chase, they refused a few very low-ball offers, but eventually we got an offer that was good, so I was able to sell the house, and the only ping on my credit was the comment "amount accepted less than balance", but the account was marked paid in full, and it was SO much better than a foreclosure, which would have wrecked my credit.

Now the only kicker was that before the deal could go through, the PMI company (who had to cough up the $10K deficit between net sales price, including commission, and mortgage balance) told me that I had to pay them the $10K in order for them to pay the claim to the investor. However they gave me 10 years at 0% interest (yes ZERO percent), so I pay them $50 a month and one day that will be paid. BUT no additional ping on my credit, AND no 1099 that I had to pay tax on.

I was very happy (other than the PMI deal) on how Chase worked with me, but COMMUNICATION was the key, if I had just stopped paying the mortgage without contacting them, then they would have just considered me a dead-beat and not cooperated with me at all.

A foreclosure will be on your credit report for the next 8-10 years making it next to possible to get another mortage in that time frame. At the very best you are looking at an interest rate of 10-20% if you are able to get a mortage and rates stay at the current level. If you are able to do a deed in leiu of foreclosure or sell the house another way you are only going to have the missed payments on your credit report with is much easier to overcome. For more information visit www.badgerhousebuyers.com

when do you see the housing market going back up.I am in this crissis of up-side down. I am paying on interest only for 3yrs,May will complete 1yr. I 'm trying hang on to my house as long as i can.

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Yes, some Realtors and mortgage brokers were unscrupulous, but reality is; there would have been no need for the smoke and mirrors on anyone???s part, if the borrower had actually been qualified and thereby financially able to buy home.

It???s an unfortunate financial situation that many people are in today and many more are yet to acknowledge and or realize. Fortunately for most, this will pass; not without pain but never the less it will pass. Perhaps this will be the price they will need to pay for being, for the most part, uninformed and or unwilling to take personal responsibility for their actions. Yes, sub prime financing is a problem now but only one of several; had they taken the time to read the mortgage documents and or understood them, they could have made an educated decision based upon risk tolerance and financial prowess, versus: I want it now. My guess is; if you where to ask most of these people in a financial crisis; did you make minimum 20% down payment, and did you have at least one years worth of reserves set aside for all debts, to include: car, credit card, equity line, and so on; in the event your economic situation were to worsen, the answer would be, no. That would tell me; they had no business buying that home in the first place. They would be living beyond their means by purchasing the home. The unfortunate truth is; the American consumer has been conditioned to buy, buy, buy, without any regards as to; can I afford to. For the most part, everything is bought and sold on a monthly payment plan, and many consumers fail to take into consideration these payments are their responsibility far out into the future, regardless of their yet to be known financial future, and or, economic situation. Today to their detriment, they have rising interest rates which also means higher payments on old debt in, addition too unknown job security, which means questionable employment income in which to pay past and current debts. Those once disregarded debts, are come back to haunt them and the economic situation are only compounds their unfortunate situation. My hope for them and many others is; having cleaned their slate, by foreclosure if need be, look back and learn from their past mistakes by living within their means. A home is an investment and as such; should be researched thoroughly and bought only at a price and time that is appropriate. Like any investment; past performance is no guarantee of future performance and a loss of the entire investment is a possibility