Living After Foreclosure

Liz Pulliam Weston wrote recently on steps to take if you’re facing foreclosure.  There are smart ways to go about it, and not-so-smart ways.  Here are three more of her suggestions with some of my comments:

Be realistic.  A house is just a house.  It may have a lot of sentimental value but when all is said and done it’s just a structure and a place to hang your hat and store your stuff.  If this structure is costing too much, then getting out while it’s still possible to get out is wise.  I certainly wouldn’t want to pull myself away from my house, but when facing foreclosure being able to walk away with the credit rating intact is certainly a better option.  This might mean forfeiting some equity to sell the house, but in today’s market, selling and living to tell the tale is a win.

Get organized. Especially if you’re approaching your lender for a modification to your loan.  Weston writes:  “The lender will specify what it wants, but typically you’ll need to supply the details of your financial situation, a budget, documentation of your hardship (a letter from your doctor explaining an income-reducing illness, for example, or your layoff notice from your employer) and a ‘hardship letter’ that outlines, in heart-rending detail, the circumstances that led you to fall behind and the improved prospects that will allow you to get your financial life back on track.”  Even if this isn’t the case, organization helps, because maintaining the paperwork from the lender is useful for whatever negotiations you want to attempt. 

Sell the house. If you have enough equity in your home to pay off your mortgage and pay the real estate agent’s commission, this is the best outcome if you’ve reached the conclusion that you can’t afford the house anyway.  The bad marks on your record stop and the problem (your house) is gone.  If you’re actually in a position of positive equity, your lender will be less likely to make a deal with you anyway since their loss is probably covered.

• Will your lender work with you? This article from the Chicago Tribune made a point about lenders that's an unfortunate reality: The more equity you have in your home, the less eager your lender may be to work with you. It's an ironic fallout of the foreclosure crisis that those who have been the most diligent......
• Don't expect banks to be nice to you for buying their foreclosures We just purchased a new house this week.  It happened to be a foreclosure.  It was in excellent shape even compared to a house not in foreclosure. I have to say, though, the seller jerked us around quite a bit throughout the whole process.  That wasn't pleasant at all.  But......
• Recognizing the signs of a family facing foreclosure Free Money Finance recently had an acquaintance of his go into foreclosure, and the signs of trouble were clear in retrospect. People don't advertise that they're facing foreclosure, at least not outwardly.  Even if money is getting really tight, people can compartmentalize the worry when they're interacting with others.  One......
• HUD tips for avoiding foreclosure: Part 3 The US Department of Housing and Urban Development has some good advice for people that are in danger of losing their home through foreclosure. Here are the last three tips from that list, with some discussion. Use your assets. "Do you have assets-a second car, jewelry, a whole life insurance......

• Rent or Own - What's Best Right Now? The housing market has many people concerned right now and one of the most popular questions is whether or not this is a good time to buy a home. Unfortunately, there is no clear cut answer to this question, and each individual’s financial state will determine the answer. However, there......
• Ten Tips for Funding Your Emergency Fund Emergency funds are wonderful things. Imagine how relieved you will feel when one of life’s unexpected emergencies comes calling and you have some cash put away to deal with it. First, though, you have to find a way to build that emergency fund. It can seem like a huge challenge......
• For Rent Sarasota Leaves Many Renters Facing Foreclosure Shock! For Rent Sarasota! Jenny Black of Sarasota, FL, is relieved by The Helping Families Save Their Homes Act of 2009! [/caption] Jenny really enjoyed her new (rental) home...for almost a year. Recently, she discovered her landlord was in default with an auction date set to send the property back to......
• Removing the HELOC temptation Lenders are starting to pull the plug on borrowers' home equity lines of credit in light of the falling value of the collateral properties.  They're lowering limits or freezing the accounts, preventing the homeowners from borrowing more against their equity.Banks have certainly not been shy about giving borrowers more rope......