March 8, 2010, 11:24 am
Will the Bank Accept Much less Than The Total Owed?
Perhaps, but no homeowner knows beforehand how much a bank will accept or even whether or not it’llconsider an offer for much less than the totalquantity owed. The very bestidea would be to talk to the bank about finding the principal reduced in a loan modification or permitting the borrowers to pay much lessthan what is owed so as to sell the house in a short sale.
Without calling the bank and beginning the negotiationprocess, homeowners will never know no matter whether they might have qualified for a way out of foreclosure or not. While quite a few borrowers do not qualify for anyremedy, they may be successful in gaining much more time to stay within the home and save money, but the ones who in no way even attempt are guaranteed to lose their properties to foreclosure.
How are Liens on a Home Given Priority?
Liens are given priority within the order that they’re filed. Liens for property taxes,on the other hand, will probably be given priority within the case of a foreclosure sale. But right after any back taxes are paid, then the lien filed in first in chronological order will begiven the highest priority.
Thus, any second mortgage or judgment lien will bepaid off in a sheriff sale only after the property taxes and first mortgage arecompletely paid off. This is one reason why second mortgages come with higher interest rates –there’s a higher possibility that the lien will not be paid off in the event of foreclosure.
What Sort of Tax is a Property Tax?
Property tax is an ad valorum tax. An ad valorum tax is based on the value of the great or service or property. The tax isgenerally imposed with an annual basis plus the property’s value could be reappraised regularly(commonly each year).
Other sorts of taxes consist of excise taxes,including sales taxes, and income taxes, for example the federal and state withholding taxes on a lot of people’s weekly wages. Property taxes, though, are regarded as ad valorum taxes and are imposed at the county level in many states.
Does Loan Modification Result in a new Deed?
Not commonly. Deeds are ordinarilyexecuted when the ownership of a property is transferred and are utilized to exhibit that the title has been switched from one person’s name to another. In a loan modification, ownership does not get transferred in between parties, so there is certainly little reason to prepare a brand new deed and also have it documented.
In fact, one of the scams thatquite a few homeowners have fallen victim to when attempting to stop foreclosure is transferring the title out of their names by executing a quitclaim deed. The scammers then record the quitclaim deed and gain title to the property, which just may lead toforeclosure that considerably faster.
Should I Write a Letter Requesting a Loan Modification?
This is generally known as a hardship letter, andneed to be incorporated with the application for a loan modification.Generally, homeowners ought to describe what caused them to fall behind in their mortgage payments, whether it was a job loss, medical emergency, or other issues. Also, the borrowers shoulddetail what they did to solve the challenge, how they recovered from it, and what they are doing to make sure that they never fall behindagain.
Homeowners ought to use the hardship letter as an opportunity to gainadditional understanding of their scenario and make the best case they can to the bank. If the borrowers have fully recovered, they need to state this, and if they have changed some income but their scenario has completelychanged, they need to also disclose this to the bank. The a lot more facts the bank has that may wellnot be explainable elsewhere but the hardship letter, the better.
Should I Use a Template to Write the Hardship Letter?
While you will find templates and forms which will be found online and innumerous software programs to assist homeowners write a hardship letter, the most beneficial notionmay be to discard these aids and write the letter themselves. The hardship letter is the borrowers’ opportunity to explain what happened to trigger them to fall behind, what they did to fix the situation, and why they are not expected to miss any payments within the future. Thiscould possibly be done much moreefficiently with hard work and reflection, instead of plugging a number of details into a template.