HELP! Family Member is in Foreclosure.

34 Replies

Hey I Have a Family Member of Mine who is in Foreclosure and has been for a while. Been Going back and forth with the bank for two years now. Hasn't paid anything on the Mortage in two years. They stated they went through the modification with the bank. Also showed me paper work on the numbers. Bank say's he must come up with at least $30,000 in cash to keep his home. In which he doesn't have that type of cash laying around. 

Interest rate is 6.5% which is Fixed 

$37,505 that's what is past due

$57,213.05 That's the principle amount.

Payment per month is $757 which includes everything. 

I am trying to figure out what would be the best solution to this problem to help out? Any suggestions would help out. 

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What's the house worth? I'd say selling might be the best option. Also, where is the house located?
If they have not paid the mortgage for 2 years and don't have cash laying around (after living for free for two years) I would avoid the situation completely. Unless the house has equity, there is nothing you can do.

What were they doing with the $757 per month for the last two years?

@Nancy Brook it's in the Catonsville area of Maryland. It's Roughly worth $127,000. Do you think selling hit would be the best solution? Even though it's in foreclosure? 

@Joe Bertolino job lost due to a illness left them unable to pay it. They did speak with the bank back and forth for two years. At one point that didn't accept any money for them unless it was a large sum in which they were not able to come up with. 

@Account Closed

  something does not add up.... 24 X 757 = 18,168.. even with costs and taxs and insurance .. I assume they have paid nothing on those... that should be another 7k or so.. I suspect this may have been going on a little longer than 24 months.

sell the house... that's the best route.. 

@Jay Hinrichs Hey That Does sound about right. It does Seem a little longer then two years as you have Put it. Would the sell have to be a short sale? Being as though it is already in foreclosure? 

Based on the information/numbers you provided, they should sell the house. No point in doing a modification if they can't or don't want to make the payments anyway. Just sell it and be done with it. Looks like they'd actually walk away with some money too if your numbers are accurate. 

Yes. Sell the house. There's equity there. 

@Account Closed

  well if what your saying is that the unpaid principal is 57k  the arrears to bring it current is 37k   57k + 37K = 94k... if its worth 120k they might actually make 10k selling it.  But do it NOW  as your arrearages will really start to compound on you.

Get with a Realtor that is good and have them list it.. the Realtor will get to the bottom of it.

Or call one of those Pesky we buy houses guys and see what they will do for you.. some are newbie amateurs that may be no help.. But there are others that are well seasoned and can assit you in this manner..   Along with what ever FREE foreclosure services that are provided by your state  Each state has them.. Along with the lender MUST offer a mediation session.. Now if your family flakes out and won't go to the mediation then they can just proceed.. its very common for people in this situation to just put their heads in the sand,, and let the foreclosure process take its natural winding course. 

If this is a major medical issue and they have all sorts of other BAD debt stacked up.. Bankruptcy may be an option as well... clean the slate one time.. But to keep the house they will have to prove they can get on a payment plan and stick to it.

I have done a lot of foreclosure bail outs in my day.. and I find people like this are very poor credit risk.. they are used to not paying things and even when they get a second chance they fall right back into the poor financial behavour... Renting may be what they need to do or move in with Realatives.

Originally posted by @Account Closed :

@Jay Hinrichs Hey That Does sound about right. It does Seem a little longer then two years as you have Put it. Would the sell have to be a short sale? Being as though it is already in foreclosure? 

The foreclosure actions do not prevent anyone from listing or selling.  As long as they own it, they can sell it.  Your relatives need to get the property sold before the foreclosure sale.  This is not a short sale.  Short sales are for when you owe the lender more than the property is worth. The best way to manage this situation is to get the property sold, as-is, asap.  Don't be surprised if your relatives don't act in a swift and efficient manner, or don't act at all.  2+ years of "working" with the lender and not paying a mortgage becomes a pattern for many.  Especially the not having a housing payment part.  When bank puts off foreclosure for so long, it gives the borrowers the idea it's never going to happen so they don't make a plan.  It is going to happen, probably sooner than later at this point.  If you want to help them, help them find an agent to get the property sold immediately and then help them move.

Google Baltimore County tax payment.  You will be able to see if the taxes are paid on the property.  The cost to pay taxes goes up a lot 4 months after the sale (~ end of September) as Lawyers can start to charge fees.  If not sure when taxes were last paid you can look up the tax sale results or call the county.

Be cautious in what you do to help them.  You must understand the MD Protection of Homeowners in Foreclosure Act. PIHFA.  If they are living in the house, and a deal is done incorrectly you can face treble damages and jail and return of the property to the owner, for up to 3 years after closing.  A real estate agent is necessary for the sale.

Good luck.  It does sound like there is equity in the house, and it should be sold quickly.

@WAYNE G.

  Most states have the foreclosure homeowner acts I know Oregon and WA enacted them about 07 or 08.... and I retired from chasing pre foreclosures... Not that we could not have done some deals within the new laws.. but the exposure was too great.. even if you do it correct... and your right you mess with people in pre foreclosure these days and have a complaint filed against you ... its pucker time

Sell the house. However people in foreclosure refuse to sell, instead preferring to live in the house for years, "rent free" while the bank wastes time and money going through the foreclosure and eviction process. They all pull this slimy move.

Has it been foreclosed on or is it in process of foreclosure? If bank already foreclosed they will probably be offering a dollar amount for them to leave peacefully If it is in the process you should help them sell. Might end up being short sale with all the fee's that are accruing. If this is the case get this started sooner than later

@Judy P.

  banks are Slimy or the borrowers are Slimy ?

The key is to sell is NOW.  I'm assuming (there's that word again) that the MD market is roughly equivalent to the MA market where I am.  Here's why:

1. Most buyers - at least those with kids - will want to be in a new home by the school year.  Wait until fall and the market activity is down.  A lot.  In winter, it's even worse.  By next April, it sounds like it will be too late.

2. There is a severe shortage of SFR on the market. My own town averages 200 - 220 in the summer. We're at 143 as of today - 35% down from the average count.

2a. Interest rates are still pretty low, putting the home in reach of more buyers than at a higher rate.  Low interest rates + low inventory = high demand.  They'll be hard pressed to do better than to sell now.

If there's any equity at all, find a good Realtor and do it today.  (I can make a referral if you like).  Get it on the market immediately and worry about cleaning & staging later.  You can always re-shoot and update the photos after it's cleaned out.

Best of luck to them.  I hope it all works out for the best.

- Charlie

I'm going to reiterate what many others have already said and thats to advise your family members to sell.

They really need to get the property on the market as soon as is practically possible. Free living would be pretty uncomfortable if they're foreclosed upon in February and they don't have the money to move elsewhere. 

Given the numbers you've shared, and as @Jay Hinrichs has extrapolated, they may still have the ability to receive some money through a sale. The numbers are pretty tight, and when you add a sales commission and closing costs theres very little left over, but still there maybe some if they work with and hire an experience real estate agent that has experience working through foreclosures and short sales.

I think it would be better to sell also due to this property being in Baltimore and still have equity they are way ahead of the game so selling is the best option.

Originally posted by K. marie P.:
Originally posted by @Dwayne Wheeler:

@Jay Hinrichs Hey That Does sound about right. It does Seem a little longer then two years as you have Put it. Would the sell have to be a short sale? Being as though it is already in foreclosure? 

The foreclosure actions do not prevent anyone from listing or selling.  As long as they own it, they can sell it.  Your relatives need to get the property sold before the foreclosure sale.  This is not a short sale.  Short sales are for when you owe the lender more than the property is worth. 

Actually a short sale is any sale that the bank "shorts" the note meaning that they accept less that what is due.  For this purpose it doesn't HAVE to be a short sale, but you may find it gets a quicker offer with a longer time for  move out.  

@Jay Hinrichs I just Recieved more info and they have stated that the bank now own the property though a REO. They were given a notice to vacate. So is there anything they could do at all? Or they just have to leave? They wasn't given a sell date. But was giving a notice stating that they have a certain amount of time to leave the property.

Originally posted by @Account Closed :

@Jay Hinrichs I just Recieved more info and they have stated that the bank now own the property though a REO. They were given a notice to vacate. So is there anything they could do at all? Or they just have to leave? They wasn't given a sell date. But was giving a notice stating that they have a certain amount of time to leave the property.

It's not likely that your relatives were not given a sale date.  The lender had to serve them a notice of sale before they sold it at auction.  If they received a notice to vacate from the lender or the lender's mgmt company, then the MD courts already confirmed the sale. Your relatives could have redeemed/saved the property after the sale but before the court confirmed it.  They would have needed to pay the lender in full to redeem it. I suspect that's where the large payoff amount posted earlier came from.

This ship has sailed.  Help your relatives find a place to stay or move to and/or to put their stuff in storage. If the property sold for more than they owed, they would be entitled to the overage.  They should find out what the sale price was and find out if they are due any overage.   

K. marie P. Hey thanks for the information. I should tell me then to find out the sale price and also what is overage? Would it be a amount that would have to pay or something they would receive if it sell more for what it's worth?

Originally posted by @Account Closed :

@K. marie P. Hey thanks for the information. I should tell me then to find out the sale price and also what is overage? Would it be a amount that would have to pay or something they would receive if it sell more for what it's worth?

 It's called an overage.  For example, if they owed $75K to the lender and buyer at auction paid $100K, that's a $25K overage.  The overage goes to borrower/owner.  They'd need to find out what was owed to the lender at the time of the sale and what the property sold for at foreclosure auction.  

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