I have a friend whose mother is likely facing a foreclosure on her Staten Island, NY primary residence. I hope to get as much information as I can regarding the most favorable options to prevent a foreclosure, or at least help with which questions I should ask if you need more information to be able to help. I appreciate any and all responses. Below are some details:
Amount owed: $600k (refinanced)
Estimated Property Value (Zillow and Trulia): $690k
From what I understand, she has received letters from the bank with various foreclosure notices/warnings over the past few years. Mortgage payments have been made to prevent foreclosure after these letters have been received, but it sounds like there were many payments that were late or not payed at all. She has a court date in a couple months regarding foreclosure and does have a lawyer.
There has been talk of selling the house to give the bank what is owed, and then downsizing. This is really the only thing I could think of, but I have no experience whatsoever dealing with foreclosures. I don't believe she is emotionally attached the the house, for what it's worth.
I know there is a lot of gray area in this post. Part of my motivation for posting here is to figure out which questions you would need answered in order to be confident giving advice. If there is anything you can contribute to potentially help my friend's situation, I would greatly appreciate it.
I would let her lawyer/counsel handle the issue. Downsizing sounds like it may be best, otherwise the cycle may go on and on, and life is too short to be burdened by a house payment you cannot afford some months.
It is best to hire a Real Estate Agent in her area to really get the comparable for her property and price it right. If she has any equity in the property, it is best to sell it and get the remaining proceeds. If there is not enough, the agent can sell the property as a short sale, meaning selling it to a price lower than what she owes adn this one need bank approval. The good thing about doing either is it won't go to full foreclosure and this will greatly affect her credit thus greatly affect her from getting any financing in the future or even renting a property. The agent and or the lawyer that she currentky have will be able to advise her more if he/she gets the right information from your friend's mother.
Thanks guys, that seems like good advice. Downsizing sounds like a clear winner if the house can be sold for more than is owed. This is assuming she can move somewhere else that is cheaper, but still in commuting distance (not sure where she works), which I think can be done. I didn't think about having her hire a real estate agent at this stage, but you're right, it might be a good idea to see the exact financial situation she is in with the house.
If anyone else wants to chime in or second this advice, feel free. Thanks again.
Loan modification if she qualifies, can afford the payment, and wants to keep or selling and downsizing. I'd recommending finding out truly what is owed and what the home is worth.
@Brett Goldsmith Thanks Brett. I'm guessing loan modification would be a topic the lawyer would be able to help with. Could be a better alternative to selling if she wants to stay there, and if applicable.