Is Foreclosure Looming? Here’s What To Do & What Not to Do...
As soon as you realize you may have to miss a payment (or just make a partial payment) let your lender know. If you haven’t missed a payment yet, you have almost a 100% chance of this succeeding – remember, banks would rather work with you than foreclose on you, in almost every case. If you’ve already missed a payment or two and received a letter about foreclosure, make that call as soon as possible. Explain why you’ve missed the payments that you have, and your plan for catching back up. Even if you just need to “catch up” by moving your term end back 60 or 90 days and making your next payment on time, most banks will work with you. Most mortgage insurers have programs that help homeowners who have run into difficulty, and you may qualify for those as well.
Even if you ignore the letter, the bank will not forget about you or about your account. If the foreclosure ends up going through, it will stay on your credit for six years, which can keep you from getting any sort of loan from a traditional lender over that time period.
What if the bank won’t work with you? You’re still not out of options. Amansad Financial is a broker agent licensed to handle these types of transactions. If you have sufficient equity, you might be able to refinance or take out a second mortgage. If you don’t have enough equity, but you want to remain in your home, we have a network of investors and private lenders who will work with you under IPR arrangements to give you a fresh start. In the rare event that we cannot find a solution for you, we suggest that you sell the house as quickly as you can and move.
Most of these brokers aren’t used to working with borrowers in your situation – and if you have multiple brokers running your credit, that can have a detrimental effect on your credit. If a lender sees that you have a lot of inquiries on your credit history, that can cause problems as well.
This advice is for those who have already entered the legal process. Once the Statement of Claim has come and gone, the foreclosure process will not end until all of the arrears on the note as well as any legal fees are paid in full – unless the property has been sold or an entirely new loan is in place. During this time, you should save any income that you would have used to make ongoing mortgage payments. You can put that money toward the total costs, pay for the appraisal with your new lender or pay for your move. No matter what you do…
After all you will need it for something crucial in the next few months.
That’s right – closing costs, lender’s legal fees, brokerage fees, and so on. No matter how you come out of your foreclosure, those helping you are doing so as a professional service. Misfortune brings unexpected costs, often in significant amounts, and a foreclosure is no different. With that said, though…
No lender, or broker or foreclosure refinancing specialist should ask for fees up front, except when it’s time to order an appraisal, secure documents related to a condo (when applicable) and test for water potability (on rural properties). If you are asked to pay anything else up front, move on to the next company.
Look into how foreclosure and power of sale work in Canada. The more you know, the stronger your position will be when dealing with lending brokers, and with your lender. You can set up a Google alert that will send you an email when new articles appear online about the topic.
Don’t sign any agreement with a brokerage until the representative has answered all of your questions. Before you sign anything binding, seek out ILA (independent legal advice). If you work with Amansad Financial, getting that sort of advice is mandatory to ensure that your arrangements represent the best outcome for you and your family.
In short, no matter what stage of foreclosure you find yourself approaching, you need to do the right thing for yourself and your family. Our goal at Amansad Financial is to keep every customer in their home – but that doesn’t end up working for everyone, and if you’re in that situation, we will let you know up front. There are some brokers who will try to sell you an optimistic ending that is just unrealistic, but that’s not how we operate. Give us a call today!
The first letter you get from the bank will likely come after your first missed payment, or maybe your second. This is the bank’s good-faith effort to allow you to take care of the situation without any unpleasantness. A couple months later, though, you’ll get a letter from the bank asking for the balance in full. Even at this point, with many lenders you can still get a modification worked out, but it’s best to talk to the bank before you get this letter.
This second letter will have a deadline on it, and if you haven’t taken care of the situation, the bank will talk to a lawyer to begin the foreclosure process. At this point, it’s more difficult to go back to a monthly payment plan, as the bank has put legal fees into the situation. Now, you’ll want to talk to a private lender or go through some other channel to pay the loan for you, and then you would start paying the new creditor, if you can’t sell the house.
The lawyer will send you a third letter, again demanding payment in full before a particular date. After that, the lawyer files a foreclosure petition with the court. You’ll get a copy, as will everyone else (tenants, other mortgage holders, lienholders and so on). About a month after that document comes, you’ll go to court, and the judge gives the lender an “order nisi” that starts the redemption period. This gives you about six months to pay all that you owe, in addition to interest, taxes and costs. The lender may ask for a shorter period, but six months is generally the standard. After this time elapses, the lender can have the court list the property for sale or get a foreclosure order.
As you can see, this process can drag on for more than a year. However, Amansad Financial has connections with lenders who can find alternatives to foreclosure. Get in touch with us today or see if you qualify now through our fast Pre-Qualification form.
The truth is that foreclosure is not this quick. If you let your bank know ahead of time that you will be late on a payment (as well as the reason why), then even the most aggressive lender is likely to work with you. After all, banks don’t like sending borrowers to foreclosure. First of all, they end up losing the revenue of the monthly payments. Then, they have the legal expenses that are associated with going to court for foreclosure. Finally, they often have to spend a good deal of money bringing the house back into a salable condition, or they have to discount the sale price well below the principal on the associated loan because of the damage that the evicted residents have inflicted on the interior. Foreclosure is not an option that makes much financial sense for the banks, which is why the process takes a long time. Some lenders will file proceedings as early as two missed payments (or even late payments, with particularly aggressive lenders), while others will wait for three and even four payments, in the meantime trying to contact you via phone, email and letter to find a solution with you.
The very first step in the foreclosure process involves going to court to get an order against you that sets the date of the foreclosure sale. However, the month (or in some cases, months) between the order and the date of the sale is known as the redemption period. It is at this time that you have the chance to redeem, or reverse mortgage foreclosure. It will still appear on your credit report, but instead of taking as many as 300 points off your score (which a completed foreclosure does), if you can redeem it, the foreclosure will hurt your credit significantly less.
So how do you redeem or reverse a foreclosure? Banks have to allow you to redeem it if you come up with the full amount of the principal owed, as well as interest and fees, before the foreclosure sale is set to take place. Some banks will allow you to redeem it if you can simply bring the loan current, or perhaps get ahead a payment or two. The law requires banks to permit redemption with the full amount, but some lender policies also allow redemption just for coming current. Of course, if you are able to redeem it for less than the full principal, then you still face some hurdles when your loan comes up for renewal, as your credit score will be significantly lower than it was, unless you have more than seven years (the amount of time a foreclosure stays on your credit report) remaining before the renewal of your loan. However, redemption is much better than foreclosure, as you get to remain in your home as the owner.
Amansad Financial has helped many clients who are in this position, though, so you are not alone. One of the most frequent ways in which we help clients avoid foreclosure involves the use of private lenders. These are individuals or companies that have capital to invest and are looking for ways that are not as risky as purchasing stocks or investing in futures. They don’t want to settle for the rock bottom interest rates that come from passbook savings accounts either, though, and private lending yields higher rates of interest than the banks get on their mortgages (you do, after all, represent a higher level of risk).
If you are finding yourself at risk of entering foreclosure, the best thing you can do today is call your bank and start finding a way to work things out without going to court. If you can avoid having that foreclosure on your credit report, you will be much better off over time. However, if the filing has already taken place, Amansad Financial can still help. Give one of our foreclosure reversal experts a call today.
Foreclosure Prevention -
Amansad Financial Process
Application sent to applicant(s)
Application returned & reviewed
Appraisal Completed & Commitment Issued
Commitment returned & sent to DLGN
Commitment is signed by DLGN & instructed to Lenders lawyer
Most Other Brokerage Firms
Applicant sent to applicants
Applicant returned & reviewed
Applicant sent to 1 private lender for underwriting
Underwriter sends to Lending Committee for review
Commitment returned to brokerage firm if approved. If not approved, go back to step 3 with new lender
Commitment Issued by Brokerage firm to applicant(s) with summary of terms and conditions
Commitment returned to brokerage firm
Commitment sent back to Private Lender by Brokerage Firm
Lender Committee completes final review
File Instructed to Lenders Lawyer for closing provided key conditions are satisfied by applicants.
8 TOP REASONS TO USE AMANSAD FINANCIAL PRIVATE LENDING SERVICES
1. Fast & Efficient
Amansad Financial has a large DLGN (Direct Lender Group Network) that will fund mortgages throughout select provinces in Canada and will generally provide a response within 24 to 48 hours. Our process is generally 50% faster than most other competitors. From the initial assessment to closing with the lawyer, our transactions move extremely quickly.
2. Private Lending Expertise
Amansad Financial specializes in providing great insight and solutions for customers that do not qualify for traditional bank mortgages. A high majority of the customers we assist have either bad credit and/or simply require a fast mortgage.
3. Extended Lender Relationships
In addition to the DLGN, Amansad Financial also has established relationships with numerous MIC (Mortgage Investment Corporations) across the county that are able and willing to fund large amounts with fair terms.
4. No Upfront Costs To You
Amansad Financial does not charge an upfront fee to complete an initial review and assessment. We do not collect any monies direct from our customers. All applicable fees are deducted from the proceeds of the mortgage and completed by the lawyer.
Note: A Commercial Mortgage Application may be subject to a Letter of Engagement and a Retainer Fee after an initial review of the file.
5. Independent Legal Advice
Amansad Financial requires that all our customers get ILA (Independent Legal Advice) on all mortgages.
6. Transitionary Credit Improvement Services
In Cases where private lending is required primarily due to bad credit, we have strong relationships with 3 rd Party Credit Improvement Companies that will provide you the tools to improve your credit so that you can get back to traditional financing quicker. Private mortgages are not meant to be long term. A Private Mortgage is a means to get you from point A to point B.
7. Transitionary Mortgage Professionals
Amansad Financial Services has partnerships with excellent professionals within the brokerage firm; Brokers for Life Inc. They will be available to assist you to transition you from a private mortgage to a traditional or semi-traditional mortgage before your mortgage renewal.
8. Ongoing Communication
Even after your private mortgage is in place, Amansad Financial will stay connected with you and always be available to address any questions.
If you’re going to take out a private mortgage, you’re starting a relationship with a lender that will work a little differently than what you can expect from a bank or other traditional lender. Let’s take a look at some of the key differences, so you’ll know what you have in store.
Most people take out a private mortgage to get started on home ownership while they’re still repairing their credit. Private mortgages generally have short terms (often one to two years) and sometimes just allow interest-only payments. Private lenders do not have to renew mortgages when the term expires, so you want to keep your options open by making your repayments on time. Your credit score will improve (increasing your chances of a transition to a bank or other traditional lender at renewal). If you realize that you need to adjust your withdrawal date for a particular payment, give your lender at least a week’s notice.
If you change employers during the term of a private mortgage, there are no requirements mandating that you update that information. However if you do provide that update, you strengthen your relationship with the private lender, showing that you are serious about bettering your financial situation. Even if you haven’t notified your private lender of the change, that will be a requirement for extending or renewing the loan in many cases.
Improving Your Credit
If you took out a private mortgage while you intended to improve your credit, there are improvement counselors who can help you get that score up. The purpose of this is to help you qualify for a bank loan when the private mortgage term expires – which will save you tens of thousands of dollars over the amortization of the entire mortgage.
Obtaining New Credit
Try to avoid opening new lines of credit, and keep your credit inquiries to a minimum during the term of your private loan. These activities can affect your score adversely, which definitely will not help you when it’s time to shift from a private lender to a bank or traditional lender.
The Value of Communication
Remember – a private lender is entrusting you with a great deal of capital. The clearer your communication is, the stronger your relationship will be. Private lenders are much more willing to work with borrowers who are honest and upfront.
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