Local LA homeowners may find themselves in foreclosure if they are facing financial difficulties.
Foreclosure occurs when the bank begins to take ownership of a property to recover the loss of too many missed mortgage loan payments.
If you are going into foreclosure, you may be curious about what you can do about it.
In this post, we’ll go into several foreclosure prevention measures in New Orleans that you can take to keep your home away from foreclosure.
Foreclosure prevention measures in New Orleans, LA
Not every measure will work in your situation, but we’re making you aware of them so you can decide for yourself:
1. Pay off your mortgage / sell your property. The most simple way to stop foreclosure is to pay off your mortgage. This is originally what the bank wanted, so they would happily allow you to stay in your home if they get their money back. However, this is not always possible, which may be the reason you’re dealing with foreclosure in the first place.
2. Work out a deal with your bank. Sometimes you can speak to a mortgage or foreclosure specialist about changing the structure of your mortgage and work out a deal with your bank. A deal could include having payments spread out so they are lower each month. Ensure that the deal works for you because you don’t want to end up going through the process again.
3. Do a short sale. A short sale is when you sell the property and use the proceeds of the sale to pay down or pay off your outstanding amount with the bank. This keeps a foreclosure from impacting your credit score and it gets the bank off your back!
4. Give your deed in lieu. Another option would be a deed-in-lieu-of-foreclosure, which basically means that you will hand over the deed to your house to the bank and they agree not to put you through foreclosure. This will often only work if your house is worth approximately the amount owing on the mortgage. If not, the bank may pursue the difference.
5. File for bankruptcy. In some ways, a bankruptcy is far more dramatic than a foreclosure because it impacts your whole life. However, once you file for bankruptcy, the foreclosure process has to stop so it’s still a foreclosure prevention measure.
If you’re not sure which one to do, consider this: If you can afford payments and you want to stay in the house then a foreclosure workout arrangement (#2) is probably your best option.
If you want to put everything behind you and move on with your life then consider selling your home and paying off your mortgage with that money.
Considering selling your New Orleans house?
We buy houses in LA for cash and would love to see if we can help you during your short sale. Contact us by filling out the form on this page and we’ll see if we can work with you.
Check out these other blog entries we have posted on Avoiding Foreclosure:
Relief from Being Behind on Property Taxes in New Orleans
Can I give my house in New Orleans back to the bank without an expensive foreclosure?
The Devastating Consequences Of Foreclosure In New Orleans For House Sellers
Help For Foreclosure In New Orleans – 3 Ways To Avoid Foreclosure
Foreclosure notice of default in LA– what is it?
What is a Pre-Foreclosure in New Orleans?
How to Avoid Foreclosure in New Orleans
So let’s just talk about some of those options right now.
One of the most common things people think they can do is bankruptcy. And honestly, I’ve seen a lot. Sometimes bankruptcy is the right thing for you, but what I have seen happen most of the time is the attorneys get the money and you end up losing the house anyway. So not only did you have to go through bankruptcy and have that now in your credit score, whatever equity you had in the property, you’re subject to lose that equity. So bankruptcy is, at least for me, if you were my family member, I would say try to avoid that, make that your last option.
Some of the other options are, you’ve got modifications and short sales. I want to put them both in the same category. A modification is where they’ll change the terms of the loan and maybe extend it. If you can qualify for a modification and you want to stay in the house, then sometimes that’s the absolute best option. I mean it’s better than working with a realtor. Because bad things happen to good people all the time. You can miss two or three payments because you were sick or your husband or your spouse lost their job. If that were to happen to you.
A lot of times a mortgage company won’t let you bring the loan current and you’re going to get foreclosed on. So with the modification, they’ll recast the loan and you can stay in the house. So that’s a great thing. If you could pull it off. Another solution, but it requires you to sell and also requires, with the rules of short sales, you can’t receive money back on the sale.
A short sale is where the mortgage company says, “Hey, we’re not going to do a foreclosure. We’re going to let you bring your qualified buyer and we’ll do a short sale.” Short sales are not for the faint, of heart, because they’re so technical and there are so many ways for the ball to get dropped and get screwed up. It’s a very, very frustrating experience. Modifications are too. Most people that try to do a short sale or modification are not successful.
And the reason I put them in the same category is, that having done this for so long, I just see time after time they work with the lender. The lender has got lots of files. You know, there’s some person that will answer the phone and they’ve got lots of files. I remember a case where we worked with three different short sales specialists on the same one because they kept, the turnover rate at the company was so high and it’s like every time we called in there, it seemed like we had to work with another person. So the short sales are a very scary and sometimes they won’t even tell you until the day of the short sale, or, pardon me until the day of the foreclosure that they pulled it from the sale and they’re going to let you do a short sale. It’s very, very hard to make short sales work.
As a strategy, I would try to, if you’re going to go that way then just don’t get to the end before you try to before you work with an investor. I mean try to save yourself 10 days, 14 days, and if the bank can’t pull it off too at that point, then bring the investor in. So short, yes, short sales modifications, a very difficult modification is the best thing going out there. If you can qualify for it. Just don’t wait till the last minute. Another thing you can do as a T.R.O., which is a Temporary Restraining Order. If you’re really close to being able to close on the deal, or, stop the sale or whatever. You can also do a temporary restraining order where you hire an attorney, the attorney will go before the judge and they’ll make an emergency injunction against the property and keep it from going to sale. So, for TROs have their place but are not used very often. In my 30 years of doing it, I’ve been involved in TROs four or five times. So, TROs in the right time at the right place is, is a good thing.
Another thing is don’t… I, this is a time to try to get… You know, I’m a father and a brother, a Granddad, you know, the family is for each other. So, look out to your family, ask your family for help. And you’d be surprised how often your family can come to your help, but you got to bring them into the picture, you got to let them know what’s going on. So, [going to] friends and family is another viable option. Try to get a loan from them. Sometimes just getting a short-term loan or whatever can do it.
Typically, you’re not going to get a commercial or conventional loan or any kind of loan because if it’s to this point where the bank’s foreclosing on it, then the, the lenders going to look at it and they’re going to say, you’re just not our kind of credit risks that we want to deal. Friends and family, that’s a different ball game.
So, the other two options are, if you’re going to sell it and try to capture your equity, and equity is where the house is worth one amount and, and you owe a certain amount. You could sell it for somewhere in-between those two numbers and that money goes into your pocket in the form of cash at closing. So, selling it is a good option.
If you use a realtor, what I’ve seen that happened before is realtors will try to list it oftentimes for six months or a year, but your foreclosure might be a month away or two months away. So just tried to make work out with the realtor that, hey, I’m going to list it up until two weeks before the sale. And then if you don’t have a buyer, then I want, I want the contract to terminate at that point. So, so realtor is an option. Realtors won’t guarantee they’re going to buy the house. They won’t make that promise. They won’t sign a contract that they’re going to sell it. So, they’ll sign a contract saying they’ll try to sell it. So, it’s not a sure thing with a realtor. So just think of that.
If it’s an investor, typically you’re going to sign a purchase agreement with an investor. The investor’s putting his reputation at stake when he signs that agreement with you. He says I am buying, I will buy. So sometimes selling is just the simplest way to go. If it’s an investor that focuses on foreclosures, they’re going to come in, they’re going want to just kind of walk through the house really quick. They’re going to look at it, try to evaluate roughly what the level of repairs are, and then make sure the math works for them. If they say yes and you’ve qualified them properly, your problems are solved.