Posted by Ronald * Starr(in NoCA) on December 21, 2002 at 18:46:15:
Joey---------------
The foreclosure process is different in every state. Since you don’t tell in which state the property is, it is impossible to give you detailed information.
It may be too late now. One of two things will happen: the lender gets their money, or the property is sold at foreclosure auction.
If your mother could pay the lender, she probably would have already done so. Since she has not done so, she probably does not have the resources ot pay the lender. Here are some possiblities:
Get the money from family and friends
See if there is some charity that will help her out
If it is an FHA-insured loan–HUD–there is a procedure for working out of the situation if it is possible. I think it involves talking to the lender. There is a HUD website which could give information
File chap 13 bankruptcy. This will not stop the foreclosure sale. However, it will halt it until the lender can remove the property from the foreclosure case–typically about 3 to 10 weeks. Thats gives more time to try to get money to pay off the lender
The lenders may allow what is called a “short sale,” which sounds like what you may be talking about. You mother agrees to sell the property to somebody else for the full market value or close to it. Because that sales price is lower than the loan the amount, the lender agrees to accept the total cash out of the sale as full repayment of their loan. Your mother can not receive anything from the say, usually.
If the property is worth more than the loan amount, it is doubtful that the bank would agree to a short sale. If it is worth more than the loan amount and your mother cannot come up with the money to get the loan current, she might try to sell is fast for whatever money she can get for it.
Depending upon the foreclosure process there, this might be feasible or maybe not. Also, the market value, the condition of the house, and the demand for houses might make it impossible to do. Or maybe not. Not knowing anything like that, since you don’t say any of it, it is impossible to estimate what might be done. However, you might look in the local newspapers and call the “houses wanted to buy” advertisements and see if you can get an offer to buy out your mother and give her some money. If the property is not worth more than is owed against it, this might not work. But it might, if you want to try it. It will depend upon things like the condition of the house, the amount of delinquency on the loan, and the desirability of the house to potential new owners.
If there is a lot of equity in the property, it might be possible for your mother to borrow money to pay off tahe delinquency on the loan. However, this is only a delaying tactic. If you mother does not start getting in more income to pay both the original loan and the new loan, she will still lose the property on foreclosure. Depending upon the foreclosure process where you are, it may be very difficult to get the new loan before the foreclosure sale. However, if this is an option to use, try to get a very hard-working, knowledgeable, aggressive loan broker – mortgage broker – working for your mother. Perhaps the foreclosing lender will delay the sale long enough to get the new money in to pay them.
If your mother sells the house, the foreclosing lender may delay the sale long enough for the sale to close, with them getting paid off at the time of the closing. It hurts nothing to ask them. And it might help.
Dicounting the mortgage means that somebody buys the mortgage from the lender for less than what is owed on the loan. Does not sound to me as though this is possible in this situation, as it would involve paying cash for most of the value of the loan.
I wish you and your mother wellRon Starr****