I believe it was Zig Ziglar that stated: "If you help enough people get what they want, you will get what you want." I like that philosiphy and that works for me! This is especially important when helping people who are in trouble with their homes. I can't imagine how people expect people to shell out money for help when obviously they are already short money. With that in mind, I will try to help you understand your options so you can decide what works best for you.
Many people with perfectly good credit have lost their job and have seen their income reduced to a fraction of what it was. Once this happens house payments get more difficult to make and pretty soon the lender is calling to try to get the payments. This usually adds to the stress and seldom helps. Obviously if the homeowner had the money, they would make the payment!
First let me clarify some terms.
- Borrower - Usually the Home Owner
- Bank - Most likely you went to a local bank when you borrowed the money to purchase the house.
- Lender - Many times it is Fannie Mae, Freddie Mac or Ginnie Mae. Most likely it is one of these businesses that hold the note. That is the loan that secures the mortgage on the home.
- Mortgage - The note that secures the loan.
- Note - The mortgage that secures the loan.
- Foreclosure - This is a process by which a lender may take possession of a house when the payments have not been made.
- Bank Owned - A house that has been foreclosed.
- REO - Real Estate Owned - Bank owned homes are REO.
- NOD - Notice Of Default - Sent out usually when a loan is more than 90 days past due.
- Loan Modifications - The lender may modify the loan. Reduce interest, Reduce Payments, Reduce Principle, Refinance, Extend the loan to cover amount in arrears.
- Arrears - The amount the payments are behind.
- Upside down - Under Water - The Note or Mortgage is more than the house will sell for.
- Equity - The amount the note or Mortgage is less than what the house is worth.
- Sheriff Sale - An auction where the property is offered at auction to the highest bidder. The lender may bid the full amount of the note.
- Redemption Period - A period in which the home owner can pay the amount bid at the auction and redeem the property. In Michigan it is 6 months. If it is 3 acres or more, it is 12 months.
- Short-Sale - Selling a house for less than is owed on it. This needs approval from the lender and it usually takes several months. This is a better alternative than being foreclosed upon.
Next I will post the steps and some possible solutions.
Have a good day!
