Mildred Wilkins contributes to Broker-Agent Professional. I find this professional publication a good resource for practical solutions and advice. Ms. Wilkins asked REALTORS® to pass along her thoughts to those facing foreclosure. Sadly, most facing foreclosure find themselves not only short of money but sorely lacking time to address the situation. Ms. Wilkins says that the trickle-down effect of the stimulus package may help some but when foreclosure is imminent, a trickle may be too slow.
None-the-less, today’s options are unprecedented and should definitely be explored. Keeping owners in their homes is key to stabilizing our economy. Remember, there is really no relief for investor owned properties but when it comes to principal residences or a second home, here’s advice from Ms. Wilkins and yours truly.
Ms. Wilkins advises that first and foremost, a distressed owner should stay in the home until the right to possession has ended which, in Hawaii, depends on the type of foreclosure (judicial, non-judicial or voluntary surrender). She mentions that owners should not only follow the law, they should make sure the lender does as well. Lenders are required to produce the original mortgage and note. I am told and Ms. Wilkins confirms that lenders or loan servicers must produce the original paperwork in order to demonstrate that they are the “real party of interest”. In other words, she advises that they must prove that you owe them (see also www.homeownershipmatters.blogspot.com). The system is, frankly, a mess at the moment.
Watch this. I was asked to do a “Broker Price Opinion” several weeks ago. This was a pre-listing activity. In other words, the bank said they owned the property and wanted me to get ready to list it. In fact, their lock box was already on the back door. When I entered the property as instructed, something didn’t seem right. When I investigated further, I discovered that the bank (actually the asset management company) didn’t really own the property and refused to believe me when I told them the property had recently sold for cash.
The take away is that lenders don’t always know what’s up so a foreclosure could take time. Besides, lenders often offer significant “cash for keys” which underscores the importance of staying in the home until the last minute. Remember, that any time your payments get behind, lenders will send a ‘Notice of Default and Intent to Foreclose”. If you are re-negotiating your loan or asking for forbearance, be realistic. While some payment adjustments can be made, don’t expect your payment to be cut in half. Forbearances are short term. Lenders might reduce interest rates or adjust pay-offs but if your situation is unlikely to improve quickly then it’s probably best to explore alternatives with your REALTOR®. There’s no shame in participating in a short sale. If fact, for many, there are definite advantages.
Lastly, Ms. Wilkins advises that you answer any summons you receive. If you are challenging the foreclosure or working on a repayment plan, this is the time to say so… which brings me to a final piece of “Mom” advice; the State of Hawaii is again allowing REALTORs® to assist distressed homeowners. Your agent can be a great resource. Trust me, there’s nothing fun about showing a foreclosed home, they’re often dirty, smelly, buggy and if you’ve been around as long as me, it’s sad ‘cause you remember them in better days.