How to Survive Foreclosure or Avoid It Altogether

Top Five Things You Must Do
When You First Realize You're in Danger of Foreclosure

The number of foreclosures today is unprecedented today. Millions of houses in the U.S. are in some stage of foreclosure. However, if more homeowners were to get the right information in their hands faster, before their foreclosure date, many of these foreclosures could be avoided - or at least their losses from foreclosure could be significantly reduced.

Foreclosure affects a homeowner in multiple ways - from a financial, legal, tax, credit, and personal standpoint - and you must address them all to best protect yourself and avoid the most loss.

The top five things you must do when you first realize you're in danger of foreclosure are summarized from a new eBook called, "How to Survive Foreclosure - or Avoid it Altogether."
This new resource includes the best foreclosure-related advice from 7 top-notch experts to help homeowners know what to do during and after foreclosure.

The experts include real estate and bankruptcy attorneys, CPAs who use sophisticated tax strategies, senior mortgage consultants, financial and credit specialists, one of the top short sale companies in the U.S., and a licensed professional counselor.

Their advice:

1. Pinpoint the reason you're now facing foreclosure in the first place. If you are experiencing a temporary setback, your options to foreclosure will be different than if you know you definitely can't make your mortgage payments now or in the future.

2. Try to keep your loan and work out a way you can afford to make the payments. First, call your lender to apply for a refinance under the Hope for Homeowners Act. If not, ask for a loan modification, repayment or forbearance program to catch up on missed payments and be able to continue making them. Call your lender everyday to let them know you're serious and want to work out a solution. If you feel that your lender is not cooperating, contact a local mediation company for help.

3. If you know you cannot afford to keep your loan, determine when it makes sense to stop making payments. The sooner you conclude that you cannot catch up or consistently make payments, the less money you will give up in trying to save a situation that cannot be turned around. Don't make the mistake of draining all of your life savings, retirement and other funds to hold onto a loan when you know your situation will not change and allow you to get back on track with your mortgage payments.

4. If you must give up your house, determine if your house is in a judicial or non-judicial foreclosure state. Knowing what legal rights you and your lender have is critical when trying to negotiate with your lender to avoid foreclosure.

If you've received a Lis Pendens from your lender, you are in a judicial foreclosure state and your lender has filed a lawsuit against you for the foreclosure and the deficiency. If you've received a Notice of Default from your lender, your house is in a non-judicial state and your lender has not filed a foreclosure lawsuit against you. A list of state-by-state-guidelines is spelled out simply in the eBook.

However, even if your house is in a non-judicial state, your lender has the right to sue you for the deficiency after a foreclosure or short sale; but there are many variables that determine whether or not they will actually take this course of action.

5. Above all, don't just walk away from your house and let it foreclose. You'll bring on even more problems that could cost you much more than just your house. Try to at least short sale your house to cut your losses in credit and tax. Short sale is when your lender forgives the difference in what you owe on your loan and what a buyer is willing to offer for your house. Ideally, the lender will accept the short sale offer and write off the deficiency as cancelled debt on a 1099-C tax form. (See other alternatives in the eBook).

A short sell is a much better solution for both you and your lender. For you, the credit implications are much less than if you have a foreclosure on your record. Short sale is a "bruising" of your credit for one to three years; and less if you use a good credit repair company. Foreclosure can stay on you record for almost 10 years; although it can be less if you take steps to repair your credit and use a good credit repair company. (See How to Rebuild Your Credit inside the eBook).

For your lender, there is less debt they must write off as a loss and the house is sold so the lender does not have to repossess the house; causing even more cost for them.

For those who live in the house, the Mortgage Debt Forgiveness Act excuses you from having to pay taxes on up to two million of debt that your lender cancels in a short sale or foreclosure. However, the Mortgage Debt Forgiveness Act does not apply to those who don't occupy the house, such as investors. To avoid paying taxes on cancelled debt if you're an investor, you'll have to prove insolvency. (See Tax Implications inside the eBook).

About the Author:

Elin Bullmann, the author, has experienced foreclosure first-hand as well as successfully avoiding eight others - but only with the help of experts she worked with for over a year to gather the best information on what to do.

Because she couldn't find a resource that had all the information she gained from these experts, she captured it for others to use in this first-of-its-kind eBook titled, "How to Survive Foreclosure - or Avoid it Altogether."

The short sale experts in this eBook currently have a 91% success rate in helping homeowners and investors avoid foreclosure. They service Oregon and Washington but have a national database of trustworthy short sale companies they recommend to homeowners in other states, which is helpful amongst many foreclosure scams homeowners want to avoid.

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