Ask for a fee before providing you with a service;

Say they can stop foreclosure and save your home if you are in default;

Take responsibility for your house at a discount rate;

Request you pay them rather than your lender;

Request you move your deed to them; or

Any company that declares they will provide a good arrangement

Always find out if a company is valid ask your state’s Attorney General www.naag.org

1.  Don’t ever make a verbal contract.

2.  Its not advisable to refinance your mortgage a number of times in a short time frame.  Every time extra fees, points and refinance charges will be added.  All these extra costs will be included when working out the annual percentage rate of your loan.  It is highly likely you will get a higher rate of interest

Glossary

Acceleration Clause

Mortgage holders may immediately announce the whole debt due and payable when you default if there is an acceleration clause.  The majority of mortgages do have this clause.  Take for example if your home is mortgaged for $80,000 and you don’t keep to your monthly payment the full $80,000 can be demanded by the lender.  According to the acceleration clause you must comply immediately.  If not, the lender can set foreclosure in motion to fit in with the state’s regulations.

Deficiency Judgments

It is compulsory according to the law that mortgage insurance like PMI is paid by the mortgagor.  This must be paid for the time period the first mortgage is higher than eighty percent of the home’s value.  When home prices fall they can be sold for a price lower than the loan balance.  A lender can request the court to file a deficiency judgment against the mortgagor because PMI does not protect the shortfall.  If your loan is calculated as recourse this judgment allows the lender to get the shortfall from your other possessions.

Foreclosure by judicial sale

The most used way to foreclose on real property is judicial sale.  This procedure is under the scrutiny of the court where the property is sold.  The earnings from the sale are for:  (1) the lender as according to the mortgage terms; (2) other lien holders; (3) the property mortgagor if there’s money over.

Foreclosure by the power of sale

When property is sold without the scrutiny of the court by the lender or mortgage holder it’s foreclosure by the power of sale.  This is a well organized way and is allowed by most states.  The same as foreclosure by judicial sale the earnings go to:  (1) fulfill mortgage conditions; (2) other lien holders; (3) the mortgagor if there is money over.

Deeds in lieu of foreclosures

Deeds in lieu of foreclosure are permitted by certain states.  Defaulters according to the conditions of the mortgage in these states are instructed by the court to settle the mortgage within a specified period.  If this is not accomplished within the given time the mortgage holder / lender is allowed to take title of the property.  In order to pay the debt the property owner’s interest is deeded to the lender.  This way could be of benefit to both sides.

The debt is discharged with immediate effect for property owners.  This means they won’t have to be humiliated by an official foreclosure.

Lenders find it this way is well-organized and they don’t have the expense of a court case, long foreclosure procedures and recoveries.

If the market value is reasonable (more than the figure the mortgagor must pay) this way is not the best for lenders foreclosing.  The reason is due to other lenders and banks not bidding higher than the amount owed.

Mortgage

The agreement / contract between the property buyer and the lender is called a mortgage.  It lays out the conditions of the purchase of property.

Points

The commission or fees paid to a broker or lender is called points.  One point is one percent of the total of the loan.  A mortgage of $300,000 and two points means your feel to the broker is $6,000.

All particulars contained in this document regarding foreclosure law is not legal advice.  Every attempt has been made to ensure it is accurate.  But it is advisable you speak to an attorney to ascertain which information best applies to your personal situation.

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Lawful methods to prevent foreclosure are:

You have two means of lawfully debating foreclosure:

A technical defense can happen if e.g. a property owner was denied enough notice about the default and processes.  But a technical defense is not the best argument to prevent disclosure.  This is because a mortgage lender can win a defense by rectifying the error in the process.  In the e.g. given a lender can put forward another default notice and the process will start anew.

The most effective way for a property owner to prevent / stop foreclosure is by substantive defense.  This kind of defense extends to the conditions of the mortgage.  There are instances of substantive defenses to foreclosure:

1.  When the money owed as well as the interest was paid in time (according to the conditions of the terms of the mortgage) and you are definitely not in default;

2.  If the mortgage was obtained illegally by the lender;

3.  Bankruptcy must be declared by the property owner.  If bankruptcy is declared (field) prior to a foreclosure deal has the effect of a temporary stop (stay) of foreclosure and

4.  A sure way to stop foreclosure is to pay the money owed as well as the foreclosure costs and expenditures of the lenders.

You must file an objection to the foreclosure sale with the court if you think you have lawful grounds to stop it.  The majority of states allow this to happen prior to a foreclosure sale, preceding the sale, prior to court approval of the sale and if the sale was unlawfully carried out.

Sensible proposals to halt a foreclosure sale:

1.  Get the precise details regarding what the lender thinks you did or not.  Find out what you can do to put it right.  There are lenders who will cooperate if you do.  Asking could help.

2.  Settle late charges carried by the mortgage holder, loan payments and interest fees. This is usually the hardest method for the property owner but there is no better way to stop foreclosure.

3.  Come to an agreement with the mortgage holder to stop foreclosure.  If you can you may get permission to remain in your home.  This will shield your credit score.  It may be to your benefit to speak to the mortgage holder about a compromise.  You could ask:

For your payments to be decreased and paid over a lengthier time period; or

Offer to have your interest rates increased or add a point for lowering payments

Request a loan refinance to get a better rate of interest so that payments are reduced

4.  In order to get a bigger portion of equity sell your home.  Choose a real estate agent who has experience in foreclosure investments.

5. Return the house to the lender of you won free will read Deed in Lieu of Foreclosure)

6.  If you can convince the lender you can come up with the cash you could delay foreclosure for a single day.

Tax Concerns

Foreclosure does hold tax penalties.  When a foreclosure debt is absolved it is the taxpayer who is regarded as having made money.  The property owner or taxpayer loses property and could owe money to the IRS.  This will be on the discrepancy between what is payable on the mortgage (absolved foreclosure debt) and what the property was sold for (property worth).

Greater numbers of property owners will have to pay tax on proceed from foreclosure sales.  This is due to greater numbers of foreclosures and a fall in the prices of houses.

Tips:

1.  Never overlook a written communication.  Immediately reply to any notification you get.  Get the precise particulars of what the lender thinks you did and did not do.  Enquire what you can do to rectify the default.  Immediate action has a better chance of getting good results.

2.  To get a favorable outcome use a lawyer to consult with lenders.

3.  If possible have the loan restored and settle all loan payments and costs incurred by the lender.

4.  Declaring bankruptcy should be your very last option.  The vast majority of property owners who file for bankruptcy do lose their investment.  This ensures foreclosure and bankruptcy will show on their credit files.  Prior to declaring bankruptcy you should speak to a bankruptcy lawyer.  Even so, you could still lose your house and you will have bad credit for a minimum of seven years.

5.  Keep away from companies which:

Click here to see Part 3: Know What Foreclosure Is Part 3

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The defaulting property owner is given a written notice of default by the mortgage holder.

The property owner has a specific time period in which to rectify the default by paying all outstanding money.  This entails attorney’s fees, penalties, interest and all fees enforced by law or mortgage.

Subject to the regulations of the state where the property is situated, the lender is allowed to seek judicial foreclosure (this entails filing a lawsuit in court) or non foreclosure.

It is the norm for mortgage holders to allow property owners the chance to restore the default.  If this does not happen in the given time frame, a notice of foreclosure sale is given by the mortgage holder.

It is permissible for the lender to buy the property and sell it privately.  Or the property is allowed to be publicly auctioned to the highest bidder.

A property owner who is still residing on the property will have an unlawful detainee suit filed in order to evict the property.

Is a Property Owner’s Debt Completely Settled by Foreclosure?

Foreclosure does settle some of the debt but not all of it.  The mortgage that was accepted when the property was bought (original mortgage), 2nd mortgage and HELOCs are settled (wiped out).  But if the 2nd mortgage and HELOCs are not completely paid for from the profits of foreclosure, the property owner must pay these off.

If there is a fall in the property market certain properties are sold at a lower price than the balance on the first loan.  An example of insurance is PMI and if there is no insurance that protects the disparity created by the amount owing on the property and what it will actually be sold for, a deficiency judgment opposing the property owner can be entered by a court.  Deficiency judgments lawfully force property owners to pay back the discrepancy.  These judgments also allow mortgage holders are allowed to collect the remains of the money owed from assets belonging to the property owner.

Lawful Responsibilities of Mortgage Holders’ in Foreclosures:

There are two main responsibilities held by lenders or mortgage holders:

1.  Notification:  In the majority of stats the most significant portion of the foreclosure procedure is to give the property holder notification.  Lenders have to do the following – a) give enough notice so the property owner can understand he or she is in default and – b) let the property owner know he or she has the right to restore the default prior to the lender beginning a process of foreclosure.  Never overlook anything in writing from your mortgage provider.  Take care of it immediately.  Take careful note of everything the lender believes you did or didn’t do.  Find out what can be done to restore the default.

2.  Written claims (proof of money owed under the mortgage):  The figure owed by the property owner under the mortgage must be listed when lenders file statements.  The figure owed incorporates charges allowing the lenders to charge according to the conditions of the mortgage of the laws of the state where the property is situated, states, principal, attorney’s fees, interest and late charges.  In a large number of states it is lawful for the lender not to forward a demand to the property owner.

Relief for Soldiers and Sailors:  Prior to starting a foreclosure it must be qualified in writing that a property owner is not a member of the armed services.  Those deployed for active service are partly shielded by the Soldiers’ and Sailors’ Civil Relief Act.  An attorney will explain your rights regarding foreclosure if you are a member of the armed forces.

What to do if the lender is in the wrong:

If you suspect the lender has made an error with the figure claimed or you have not defaulted you must write to the lender.  Tell him or her why you suspect there is an error.  You must be lucid when explaining and you must supply documents to prove what you say.  If the lender differs, you are allowed to go to court to prove your point.  For this purpose the documentation of proof is of the utmost significance.  You may opt for the services of a legal expert to manage your documentation and appearances in court.

Click here to see Part 2: Know What Foreclosure Is Part 2

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This individual knew he had sorted out both tax liens a long time ago he didn’t know if he could prove it because he didn’t know where the papers of proof were.  To assist him he looked at the IRS publication 594:  The IRS Collection Process.

How complicated was it to remove the tax liens from his credit report.  Were there any pitfalls to be aware of?

Darren T Misch an IRS problem solver and tax attorney was asked to provide answers for the following questions:

1.  What amount of time does the IRS take to discharge the lien from payment or settlement of a tax debt?  Explain the procedure.

According to the statue there is 30 days to discharge the tax lien (Internal Revenue Code 6325).  But this is often given a miss and it’s not carried out.  In such a case a taxpayer can get in touch with the Lien Desk ph (800) 913-6050 or fax 9859) 669-3805.  In the Form 668(Y)© Notice of Federal Tax Lien there is a black box in bold, middle of the page, left side.  You will read the lien must be refilled by the date found in column (e).  If this is not done the lien is dischargeable on appearance.  The meaning is if some other lien was not filed prior to column (e) dates, the lien can’t be imposed.  The IRS is not keen to give out a release for a lien that has run out.

2.  When a lien is released, are the credit agencies routinely informed by the IRS?  If not, what must consumers do to ensure their credit files are kept up to date?

At the court where a lien is first filed a Certificate of Release is filed.  This is when the credit reporting agencies should become aware of the release.  However, it would be best request three authorized copies of the release and you ensure the three credit bureaus get them.  The reason is it could take months perhaps years before these bureaus notice the release.

3.  You may not be familiar with a tax lien on your credit reports.  How do your find out if it’s applicable to you?

You will have to backtrack to each county’s public records office where you have resided from when the Federal Tax Lien was issued.  This office goes by different names depending on the state.  In California you will find the Office of the Recorder.  In Florida you will find the Official Records of the Clerk of Circuit Court.  Certain states do have records online, some do not.

Click here to see Part 2: Manage Old Tax Liens on Your Credit Report Part 2

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It is possible to give the IRS a call. But in this situation it is best to get in touch with a tax expert in dealing with tax disagreements.  Ask this expert to file a Freedom of Information Act application.  This way the IRS Collection procedure will not be set in motion against the taxpayer.

If you don’t have proof of payment for an old tax lien you believe was settled what IRS process must you follow to investigate the matter?

You must get in touch with the IRS to confirm whether payment was made or not.  A ten year statue of limitations for the taking in of tax exists.  The ten years begins from the assessment of the tax.  But due to a variety of exceptions and situations the statue period can be lengthened.  It is best to ask an expert to handle such a situation.

6.  How long does it take for the above to get sorted out?

In general, it should take approximately sixty to ninety days.  A lien application before a request is thirty to ninety days.

7.  If you are e.g. in the procedure of obtaining a mortgage how can you speed up matters with the IRS?

Go to IRS website www.irs.gov to get the phone number of your local Office of the Taxpayer Advocate.  It is the purpose of the Taxpayer Advocate to rectify errors and delays in the bureaucratic procedure.  This office is an autonomous branch of the IRS and provides a free service. The Taxpayer Advocate is very helpful because one person will deal with you rather than many.

8.  What are the consumer tips for those who discover their credit files contain tax liens?

Don’t rush in to get in touch with the IRS.  If you are not sure whether or not you paid tax liens, it is best to get expert advice.  You could end up setting in motion an IRS procedure that will make your life difficult.  If you are certain you have paid then it’s fairly simple to sort it out.

The tax liens will not come off your credit reports automatically when you pay.  They could stay on the reports for as long as seven years.  This is lawful and according to the Fair Credit Reporting Act.

If you let the IRS know you owe taxes they can file a lien in as short a time as tend days.  You must sort out any notification of outstanding taxes as soon as you can.  This will save you from severe credit report damage.  This also goes if you have already filed tax liens.  For those who cannot pay taxes go to GetIRSHelp.com for free information on how to deal with IRS dilemmas.

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