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Facing Foreclosure

Facing Foreclosure. Latest foreclosure statistics. 1 in every 113 homes in foreclosure. 1 in every 240 homes in foreclosure. County with highest rate of foreclosure filings in FL?. 1 in every 72 homes in foreclosure. Foreclosure Process. Default by Borrower.

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Facing Foreclosure

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  1. FacingForeclosure

  2. Latest foreclosurestatistics 1 in every 113 homes in foreclosure 1 in every 240 homes in foreclosure County with highest rate of foreclosure filings in FL? 1 in every 72 homes in foreclosure

  3. Foreclosure Process Default by Borrower • Failure to make monthly payment WrittenNotice from Lender • Notice of default • Right to reinstate or cure default • Intent to Accelerate • Right to dispute validity of debt within 30 days of notice in accordance with Fair Debt Collection Practices Act

  4. Foreclosure Process cont. Foreclosure complaint filed Service of summons and complaint

  5. Foreclosure Process cont. If Borrower does not file answer or response to Complaint: • Lender may ask Clerk to enter Default • Borrower receives notice of Default entered by Clerk • Lender may ask Court for Default Final Judgment If Borrower files response to Complaint: • Lender will likely eventually ask Court for Summary Final Judgment

  6. Foreclosure Processcont. Final judgment of foreclosure • Sets forth the amount due to Lender and will list instructions for sale of mortgaged property at a public auction typically 30 days after entry of final judgment

  7. Foreclosure Process cont. Deficiency judgment: • Difference between fair market value of property on foreclosure sale date and what you owe Lender • Lender must request in Complaint and judgment must reserve court’s jurisdiction to enter • Lender mustobtain within one year of final judgment of foreclosure

  8. Alternatives to Foreclosure Reinstate • Must pay all amounts owed • Add unpaid balance to the principal of your loan • Temporarily reduced or waive payments (forbearance agreement) Loan modification* * Typically requires hardship letter, explaining circumstances that caused you to fall behind, and details of your financial situation

  9. Alternatives to Foreclosure cont. Sell the property Short sale* • Lender agrees to accept proceeds of short sale and typically forgives the remaining debt • May be tax ramifications * Typically requires hardship letter, explaining circumstances that caused you to fall behind, and details of your financial situation

  10. Alternatives to Foreclosure cont. Deed in lieu of foreclosure* • Convey Borrower’s interest in property to lender typically in exchange for forgiveness of debt • May be tax ramifications * Typically requires hardship letter, explaining circumstances that caused you to fall behind, and details of your financial situation

  11. Strategies for Working with Lender If foreclosure action has been filed: • Contact attorney representing lender to obtain authority to contact Lender directly to discussyour alternatives to foreclosure Contact lender’s Loss Mitigation department Follow-up with Loss Mitigation Specialist assigned to your file regularly

  12. Government’s Mortgage Relief Program Federal government launched theHope for Homeowners Program on Oct. 1, 2008 • Refinancing with FHA • New mortgage will not exceed more than 90% of new appraised value of home

  13. Hope for Homeowners Program Certain eligibility requirements must be met by Borrower Initially projected to help 400,000 struggling homeowners avoid foreclosure over three years Voluntary program for lenders

  14. Hope for Homeowners Program cont. Since inception of program less than 150 applications have been received More information call 1-800-CALL-FHA (255-5342) New relief programs recently announced by Freddie Mac and Fannie Mae, Citigroup, JP Morgan, and Bank of America who acquired Countrywide Financial

  15. Foreclosure Scams Filing of foreclosure action tips off scam artists that you’re in trouble • They may promise to: • Save your credit • Cure the default • Give you some money if you sign your house over to them If it sounds too good to be true, it is!

  16. Impact on Borrower’s Credit Rating Payment 30 days late or more: • FICO credit score may drop approximately 100 points • May appear on credit report for 7 years Short Sale: • FICO credit score may drop approximately 200 points or more • May be able to obtain loan for new home within 2 years

  17. Impact on Borrower’s Credit Rating cont. Deed in lieu of Foreclosure: • FICO credit score may drop approximately 250 points or more • Will appear on credit report for 7 years Foreclosure: • FICO credit score may drop approximately 125 to 175 points • Will appear on credit report for 7 years

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