Foreclosure Advice

Let's get one thing straight right now. Foreclosure is the most damaging thing to have on your credit report. It will completely annihilate your credit options for years to come. Even with aggressive credit repair strategies you will be suffering severe credit damage for seven years or more after a foreclosure. Foreclosure is even worse than bankruptcy on your credit history. Foreclosure is to be avoided at all costs. Do everything within your power to keep a foreclosure off your credit report.

Banks really do not want to take homes back. Banks are not in the real estate business. They are in the money lending business. An empty house, sitting on their books hurts their business. No one is paying them any money for that empty house. It in fact, costs them a lot of money in many, many ways. The bank must spend money on attorney's fees, real estate agents fees, appraisers costs, rehabbing expenses, taxes, insurance, and even bare necessity utilities to keep frozen pipes from bursting and lawns from dying etc.

In addition to all these costs associated with holding an empty house on their books, the Federal Reserve will punish the bank as well. Banks must report to the fed on how many REO's (real estate owned properties) or bank owned properties they own. The more they have on their books, the harsher the fed's enforced restrictions on the banks ability to do business will become. The first step the Fed will take to encourage a bank to reduce the amount of REO's on their books is to make the bank pay a higher rate of interest on the money that they borrow to lend to their customers. This makes it difficult if not impossible for the bank to compete effectively with other lenders who don't have to pay that higher rate for their money.

Next, if the bank does not reduce the number of bank owned properties it has, the fed will restrict the bank from making any new loans. Loaning money is the financial life blood of the bank. Banks will do almost anything to avoid that kind of sanction. With the number of foreclosures in process today, being among the highest in history, the pressure is on the banks to find other solutions to this problem than just "taking the house back".

Each lender has their own terminology for these alternate options to foreclosure. Some call them work out programs. Some call them forbearance plans. Still others call them special payment options. There are many other names, but whatever they call these plans, they are worth looking into. Find out what is required to qualify for one of these plans, and if you can swing it. If it works for you, and keeps you in your home, that is terrific.

Most of these plans require you to come current on your loan before they are offered. If you are already late a payment or two this may make it difficult or impossible to qualify. But, like I said before, the pressure is on the bank. High REO counts hurt them, where it really makes an impact. This has necessitated the loosening or lowering qualification standards of many of these programs. So find out what your lender is offering, it is more than worth the effort. Second mortgages are more apt to cut you a favorable deal because their secured position almost always disappears at auction.

The only lien holders whose attachments carry through the sale of the home at the trustee's sale or foreclosure auction are the IRS, first mortgage, and property taxes. The money owed to the second mortgage will undoubtedly loose the security of being tied to the value of the home, when it is either sold at auction or "taken back" by the bank. They are there fore far more willing to protect that secured position by helping the home owner avoid the sale of the home.

If the savings you can obtain by working with your second mortgage is enough to make your financial ends meet, then this is a great opportunity to save your home and avoid foreclosure. Get on the phone with your second mortgage. Explain your situation, cut what deal you can.

Good luck to you. This has helped a lot of people stay in their home.

Integrity 1st Consulting is your Foreclosure specialist- Kathy Swift

Article Source: http://EzineArticles.com/?expert=Kathy_Swift