Facing Foreclosure!

If you are one of the many people in this country threatened by having your bank foreclose on your home know that there is help and free advice out there for you.

If you are afraid of falling behind or if you are already delinquent is is important that you know about the options available to you. Moving fast and not letting time go by is the key to stay on top.

Even your first late payment will have an effect on your credit. Even though lenders might not contact you until the second late payment, they report every late payment to the credit bureaus. Every subsequent late payment will further grind down your credit score. Be aware that once a default has been filed with the credit bureaus many scam artist will try to take advantage of you by bombarding you with mail, phone calls and e-mails wanting to buy your home for cash or taking over your payments.

To read more about the different types of scams visit the web address below:

Foreclosure Scams


What are your options when you think you are going to fall behind or already have fallen behind in your mortgage payment.

What options do lenders provide?

• Lenders might agree to temporarily reduce or waive payments.
• The might help you to set up short term repayment plans for making up your missed payments.
• Or you might be able to have the unpaid payments added to your principle balance increasing your payments somewhat to make up the amount of missed payments.

Other options might be available based on the type of loan you have, therefore I highly recommend talking to your banker right away. When contacting your bank that is not a local bank make sure to ask with someone in the "Loss Mitigation" department.

What should you do?

1. Contact your Bank

The sooner you contact your bank to discuss what options are available to your the better and you might be able to avoid the worst.

2. Make a Budget

Having a clear overview on where you stand with all your bills in a good start in trying to figure out what to tackle first. Read more on "How to not pay your bills" .

3. Consider getting Help

The Beltrami County Foreclosure Counselor

Bi-County Cap
Teri Morrison
tlmorrison@paulbunyan.net
2529 15th Street
Bemidji, MN 56601
Phone: 218-751-4631
Fax: 218-751-8452

4. Be Realistic

Don't try to hold on to a house that you simply can't afford any longer. Some expert say that if you have any equity in your home, try to sell the home before things get out of hand. Rather than pricing your home a higher to get some money in the sale, price your home aggressively. You might already be competing with homes that are foreclosures and if you want your house to sell you got to "set the market" not chase after it by doing price reduction after price reduction.

There is nothing wrong with wanting to walk away with some money in your pocket but jeopardizing potential buyers bypassing your house because of price can get you just another step closer to foreclosure if you seriously struggle to make payments. Taking less or not making any money is still better than ending up in foreclosure, don't you think? This may sound harsh but it is reality. In order to compete in a market filled with buyers looking for a deal, pricing your house in a way that makes you think: "I am practically giving it away", is the right price for your house, because that is how buyers will look at it.

5. Can't sell your house for what you owe on it?

Consider offering a deed in lieu of foreclosure. This option involves offering the deed to your home to the bank and the lender than agrees to release you from your mortgage. To read more about this option please follow the link below.

Deed in lieu of foreclosure - US Department of Housing and Urban Development

6. Negotiate a Short Sale

If you owe a substantial amount more on your home than what you can sell it for, you might be able to negotiate a short sale. This means the bank agrees to take less for the home and not go after you for the deficit. This usually can show up as a "settlement" on your credit score and further damage your credit. Consulting with an attorney is advised.

If nothing else works and the foreclosure process continues know this. Even though your credit is substantially damaged, once your situation improves you may be able to obtain another mortgage in a few years. To read more follow the link "Bounce back fast after bankruptcy"

If you have more questions about foreclosure post any comments or questions to this blog and I would be glad to point you in the right direction. Another great link for more information on what you can do when facing foreclosure is HUD

Disclaimer: None of the information is guaranteed and anyone facing foreclosure should contact a local foreclosure counselor, the bank, or an attorney.

Things to consider when buying REO properties.

REO is an acronym for Real Estate Owned. It is a term used by banks referring to properties that an institution has foreclosed upon and now owns. This usually happens when the foreclosure auction/sheriff sale was unsuccessful.

Why would the foreclosure auction be unsuccessful you might ask.
The minimum bid at a foreclosure auction is based on the loan amount, additional accrued interest, attorney fees and any additional costs. If there was enough equity in the property to satisfy the loan the owner would have probably sold the property and paid off the bank. Many people today owe more on their property than what it is currently worth and that is why most foreclosure sales don't even result in any bids.

After an unsuccessful auction the property then reverts back to the bank and becomes and REO property. Since banks are not in business to own real estate, they have an entire REO department dedicated to manage and coordinate the sale of these properties.

Things to look out for when purchasing REOs.
If you are interested in purchasing REO properties you need to be aware that banks almost always sell REO properties "as is", which means they are not giving any guarantees as to the condition of the property. That is why you want to ensure you make a purchase agreement contingent upon an inspection, which gives you the time to check for hidden damages, that way you have a way to back put of a purchase based on the findings of the inspection. In Minnesota we ought to be especially careful when buying REOs due to our severe winter weather conditions. If a property does not get properly winterized chances are good that you might have some water issues in the house.

Make sure you are aware of all repairs that need to be made and that you have enough cash to do so. Banks are usually not willing to do repairs since they are already selling the home for a reduced price.

To view Bemidji Foreclosure currently listed on the MLS go to Bemidji Foreclosures

All your comments and questions are welcomed and will be answered in a timely fashion.