Top Five Strategies on How to Stop Foreclosure on Your Boise, Idaho Home
What Your Lender Really Wants
According to RealtyTrac, one in every 3,191 Idaho homes go into foreclosure. Broken down amongst the top five counties in the state, one in every 958 homes go into foreclosure in Oneida, one in every 1,503 in Ada, one in every 2,109 in Canyon, one in every 2,210 in Bannock and one in every 2,342 in Shoshone.
Here are some things you should know about lenders: They really don’t want to take a home back, regardless of what you may have heard; the very last thing that the bank wants to do is foreclose on your property. It will become an extra expense that they just don’t need to incur, and it will cost them thousands of dollars to take a property through the foreclosure process. Of course, you’re now probably asking, “If that’s true, why are they threatening me with foreclosing my property? What do they really want?”
Put succinctly, the bank’s collection agency wants to scare you into making up the late mortgage payments, and by doing so, they ensure you will continue to make your payments on a regular basis until the end of the specified term as detailed in the mortgage agreement. The threat of foreclosure is the only tool that the bank has at its disposal to persuade you to make the mortgage payments; the banking industry requires them to report such a property as a “non-performing asset.”
Further, a foreclosure would also hinder the bank’s capacity to borrow more money, thus affecting its overall credit rating. The only legal recourse available to them, essentially, is foreclosure in order to minimize some of their losses. Don’t forget – just like any other business, banks and their lending divisions are there to make money, and in a foreclosure case, they will most likely lose revenue.
The best way to avoid many of these pitfalls as a homeowner in Boise is to keep lines of communication open with your lender. You should also create and stick to a budget – if you are able to receive “forgiveness” on past payments or work something out wherein you’re able to negotiate different terms of your loan, you will most likely need a budget to show your lender where your stated income is being derived from.
Why would you want to avoid or stop a foreclosure? The reasons are myriad, but the most obvious ones include:
- Maintaining your personal credit rating
- The cost of future loans on automobiles and other financed items that may get jacked up to astronomical rates with equally large fees
- Wanting to stay in your current home; seems obvious, but it’s usually the primary driver for wanting to stop a foreclosure
- Moving expenses, time and effort
We’re going to show you how to stop foreclosure on your Boise home.
You can finally be rid of the specter of foreclosure by following some intuitive tips. If you have missed more than three mortgage payments, or your Boise lender has filed a Notice of Default (NOD), it’s inevitable that you’re going to lose your home, right? No. Not necessarily. Even at this stage, there are five tactics that can be explored in order to arrest the foreclosure process.
- Foreclosure Workout
As we touched on above, up until the time a home is scheduled for auction, most lenders would rather work out a compromise with owners that would allow them to get back on track with the mortgage, rather than take the home in a foreclosure. This all comes back to communicating with your lender.
- Short Sale
After your lender files a NOD but before they consider an auction with companies that buy houses fast, your lender must take into account an offer should you receive one from a buyer – if the financial institution forecloses on your home, it is going to simply turn around and try to resell it. If a reasonable short sale offer is presented to them, they may see it as saving them the time, effort and trouble of finding a qualified buyer in a soft Boise market.
So, if your Boise home is on the market, the best advice is to aggressively and continuously seek a buyer for it, even if you’re choosing from companies that buy houses fast, once your lender puts into motion the foreclosure process. Then, make your best pitch as to why your lender should agree to the short sale.
Known to some who have gone through this process before, bankruptcy stops foreclosure dead in its tracks. Once a bankruptcy petition is filed, federal law prohibits any debt collectors – including your mortgage lender – from continuing collection procedures. And yes, foreclosure is indeed considered a collection procedure, so the day your lender is made aware that you have filed for bankruptcy, the foreclosure process will for all intents and purposes be frozen.
But here’s the thing: Once this goes to court, it’s the bankruptcy trustee’s role to merely act as a mediator between you and your creditors. In reality, bankruptcy essentially just buys you more time to replace a lost job, or perhaps recover financially from a temporary disability; it isn’t a “get-out-of-jail-for-free” card for your debts. The law requires your mortgage company and other creditors to work in “good faith” with you to craft a “reasonable repayment plan” so you can get back on your feet.
Here’s our expert advice in this area: Arrange a meeting with a bankruptcy attorney to discuss whether filing for bankruptcy is the right strategy for you.
- Deed in Lieu
A deed in lieu of foreclosure is actually exactly what it sounds like – the homeowner facing foreclosure signs the deed to the home back over to the bank, voluntarily. While taken at face value this seems as though it would represent an ideal option, it actually imparts the same impact on a homeowner’s credit that foreclosure does. You see, lenders are skeptical when it comes to taking a home back through a deed in lieu of foreclosure for a number of reasons:
- They fear the homeowner will later bring about a lawsuit, claiming incompetence with regard to what was happening
- The lender is responsible for paying any second or third mortgages or home equity lines of credit (HELOCs) off prior to executing a deed in lieu
- The lender wants to be absolutely certain that the borrower’s financial distress is genuine; one way the lender can ensure the borrower isn’t “faking poverty” is by allowing the foreclosure process to proceed
That said, a deed in lieu of foreclosure is almost never granted unless:
- Foreclosure is imminent
- The owner’s home has been on the market for several months and he or she doesn’t know how to sell a home fast
- There are few or no “junior loans” or liens the lender will have to pay off
- The seller can prove their financial hardships
- The seller initiates the process and documents the voluntary nature of their request for a deed in lieu
Even when all of these elements are in place and present, many lenders will not agree to a deed in lieu – but it’s worth a try.
In today’s unstable market, most loans are no longer deemed “assumable;” the average mortgage now contains a “due on sale” clause by which the borrower agrees to pay the loan off completely if and when he or she transfers the property. However, if you are facing foreclosure in Boise, your lender may be persuaded to modify your loan, have this clause deleted and even allow another buyer to take on your loan. In this scenario, the lender may want to assess the qualifications of the new buyer – but it can definitely be a win-win option for all. It might even be possible to negotiate a down payment from the buyer, which could then be used to pay off your outstanding past due mortgage balance.
In a lease-option scenario, the buyer becomes your tenant and you continue owning the property until the buyer:
- Has saved enough money for a down payment
- Improved his or her credit sufficiently
- Sold their other home
In some situations, we have seen the buyer make a one-time, “lump option” payment upfront, paying the owner to obtain the option to purchase the home. In this case, you can apply the option payment to bringing your mortgage up to speed – then, the buyer can make monthly lease payments which you, the seller, then apply to your mortgage. To successfully implement a lease-option to arrest the foreclosure process, it is essential to negotiate lease payments that cover most or all of your mortgage payment, property tax and insurance obligations – enough so that you can make up any difference and still pay to live in a new dwelling.
Some Closing Thoughts
Did you know that more than 29-percent of homes listed for sale in the Boise area are currently in foreclosure? Of course, you wouldn’t have that kind of information readily available or in your back pocket, but our point here is that month after month, it’s an unfortunate fact that all too many homeowners are struggling to make their mortgage payments.
It is very fortunate, on the other hand, for Boise residents that Northwest Home Buyers is one of a small handful of resources available to help Boise homeowners deal with delinquent mortgage payments, avoid the pitfalls associated with going further into default and avoiding foreclosure. We know how to sell a home fast, and understand all the factors surrounding the realty market in Boise.
If you have been struggling to eliminate increasing mortgage payments for good, now is the time to contact us so we can put you on the right track.
If you find yourself facing foreclosure and unable to find tenants or maybe just inherited a home, in any case, we can help you sell your home in Boise in 7-10 days. If you’re thinking of selling and are exploring your options, consider selling directly to us.
Call our team at (208) 214-3365
If you don’t want to go through the hassle and headache of selling to the market, then we might be able to help. We’ll give you a quick call once we find out a bit more about your property in Idaho, and make you an offer on your home the same day.