LilLee0111
LIF Adolescent
Member since 8/06 529 total posts
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House in forclosure
A friend of mine is in a huge mess, both her and her husband lost their jobs months ago, she was on a forbearance program with mortgage company but that ended and now she can't afford the mortgage, it has since gone up so they have to go into forclosure. Does anyone know if you can get out once things gets better? She is hoping to use her tax return in February? Thanks!
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Re: House in forclosure
If she wants to keep the house, she can try to negotiate something with the bank, like another loan modification. However, loan modifications are very hard to get and really won't be given if there is no income coming in at all. It's more likely to be given if someone is a little short per month because of a temporary situation, but not because there is a total inability to pay.
If she stops paying the mortgage, and gets more than 3 months behind, a lis pendens/notice of lawsuit is filed and foreclosure could technically happen. In reality, it takes A LONG time for a bank to foreclose on a home... years (on average about 7 years). In NY, we have a judicial foreclosure process to the bank just can't come in and take the home. They have to go through legal channels, and it takes forever for these situations to get resolved in the courts.
But while your friend could likely keep living in the house for quite awhile without paying, there are downsides to doing this (emotional, financial, etc.). It hurts your credit more than doing a short sale does (to not pay the mortgage for an extended period of time), the house usually falls into disrepair, the owner of the house is always dodging the bank and "waiting for the other shoe to drop," and most of the time, when a bank eventually forecloses, the "debt" is not forgiven but the bank can still pursue it from the owner of the home (which is why most people who are foreclosed on file for bankruptcy).
A short sale, which would mean selling the house, would end the prolonged process of losing the home and maybe give your friend peace of mind. Credit can be repaired and your friend could buy another home in 2 years if her situation improved. She sounds like a good candidate for a short sale because she has a classic "hardship" (job loss).
It's very hard to "catch up" once someone falls behind on a mortgage because fees/interest/penalties accrue so quickly and increase the amount owed exponentially. I had a short sale seller client who stopped paying her mortgage 4 years earlier. Although the principal owed on her mortgage was only around $120,000, the payoff amount was close to $350,000 because of back taxes, interest, fees, etc.
It's a sad situation and my heart goes out to your friend, but sometimes it's better to go the short sale route and cut her losses unless she knows her circumstances will be improving very soon (the tax return is likely a drop in the bucket and a one time thing).
If she needs help, you can refer her to me, and I could refer her to the law firm I use for short sales (they represent clients dealing with distressed sales, foreclosures, etc.). Perhaps she could get some more specific advice from a professional that could at least provide her with information about her options.
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Re: House in forclosure
This is who I use/refer my clients to when it comes to short sales or other related issues (loan modifications, etc.):
Michael Biancaniello
Client Services
Friedman Law Associates, P.C.
300 Wheeler Road Suite 101
Hauppauge, NY 11788
P 631-648-9428 EXT-318, C 516-965-1643
Fax1 631-619-6726/ or 866-235-1638
[email protected]
www.friedmanlawpc.com
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