Loan Modification & Foreclosure Alternatives
With years of experience as board certified bankruptcy specialists, we know how to help good people understand ALL the choices, and how to use each one, including bankruptcy when and how it is right. Too often, however, people are being misguided or victimized in their efforts to deal with loan modifications, foreclosure and financial problems. We can provide independent legal and practical advice about all the alternatives.
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For a FREE Consultation* to Get The Help You Need and to Avoid Costly Mistakes.
Let us help you plan your way out of your problems and take control of your life. Call us at 856-596-2828 or email us at sneuner@nv-njlaw.com for help, including a free consultation.
The Right Way to Begin the Process of Seeking a Loan Modification
Short Sales-are they right? Are they a good idea? Proceed Carefully
Mortgage Restructuring and Foreclosure Avoidance
Landlords and Property Owners or Investors
Foreclosure Rescue Scams
We help residential and commercial buyers and sellers of real estate to complete their transactions with as few surprises as possible. Again, we strive to provide cost effective benefit. Over 25 years of experience, and our years of dealing with distressed real estate in bankruptcy (with its often-complex title problems) help us meet this goal. We know how to avoid the mistakes that can cost you money and ruin your life.
If you are facing foreclosure, or are helping someone in foreclosure, we have the experience to help prevent foreclosure, or stop a foreclosure sale in many cases with a careful analysis of all approaches including mortgage modification, short sales, or using bankruptcy or redemption procedures. See article on avoiding liens in bankruptcy.
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Short Sales-are they right? Are they a good idea? Proceed Carefully!
If, as is too often the case nowadays, you cannot sell your home for enough to pay off the mortgages, taxes and other liens, a “short sale” might be a way to avoid bankruptcy or foreclosure and preserve your credit. In a short sale, the lender agrees to satisfy a lien for less than the full amount due, so you can deliver clear title to a buyer. As the seller, you do not see any money, and have to expend time, effort, and possibly money to close. Plus you take the risk. You need to know all the plusses and minuses of a short sale.
The big advantage to you is that if you do not have other debt problems you cannot handle outside of bankruptcy, a short sale can protect your credit. This can be important, IF
1. You have enough income to handle your other debt and basic living expenses after you move; AND
2. You will have enough money to move to a new home, pay a new security deposit, and stay out of financial problems;
AND
3. There are no other judgments or liens against the home besides those held by the lender you are dealing with;
AND
4. The lender will release you from any further debt or obligation on the loan;
AND
5. You will not get hit with a tax bill for “debt discharge income”.
Here are the disadvantages:
1. You could face continuing exposure to later lawsuits by the lender for an unpaid balance. In New Jersey, if your home is sold at a foreclosure by the lender holding the first mortgage, that lender must file suit to collect any balance left owning within 3 months after the sheriff sale. In a short sale, if the lender does not forgive the entire debt by cancelling the Note, that Lender (or some investor who buys the loan balance) can take up to 6 years to sue you for the unpaid balance. Many lenders have agreed to cancel the mortgage in a short sale, but not the Note, which is your personal IOU.
NOTE: This does not apply to mortgages other than the first mortgage. It does not apply if you do not occupy the property, or a unit in a multi-unit property, as a residence, on the date the foreclosure is started. Call us for detailed advice if you are facing a foreclosure or suit by a second mortgage holder or on a property that you do not reside in.
2. You may have to move out of your home before you are ready or have the money to pay for the move and a security deposit etc for a new home. It now takes at least 12 to 18 months from the start of foreclosure to get to a sheriff’s sale. During that time you can legally continue to live in the home, without paying anything to the lender. The money saved in that time (a year’s mortgage payments) could get you back on your feet, give you money to pay for moving and a new security deposit, and a lot of other important purposes.
3. You will likely have to sign a contract with a buyer before the lender will even tell you what they will agree to. If the lender balks, you could be stuck with a contract obligation to a now-very-unhappy buyer, and might have to pay for lawyers to get you out of the mess, or pay money at closing to deliver clear title.
4. You might not be able to avoid suits by other creditors or bankruptcy anyway. There might be other judgments, tax liens etc. that have to be paid off at closing. Or you might have other debts that you end up unable to handle.
5. You might get hit with a tax bill for “debt discharge income” or capital gains. When a lender cancels or forgives a debt you owe, this creates potential taxable income to you. You should consult your accountant or tax adviser, but be especially wary if (a) the mortgage loan that is forgiven was used for something other than buying, building or improving your home; (b) you have not lived in the real estate for at least 2 of the last 5 years. Always get qualified tax advice about the effect of a short sale in your situation, because these types of state or federal taxes will most likely not be dischargeable in a bankruptcy for several years. See IRS Disclosure at bottom of this page.
We strongly recommend getting qualified and independent advice. Short Sales are a good idea for some people, but only after doing a careful analysis of your budget, tax and your entire debt situation. For many others, a short sale can make a bad situation worse. Please feel free to call us at 856-596-2828 for a free consultation to help you make the right decision.
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Mortgage Restructuring and Foreclosure Avoidance
A mortgage restructuring may be another choice open to you. Here again, there is a lot of “chatter” out there, and a lot of misinformation. Until recently, most mortgage lenders were offering “ice in winter”. It was impossible to reach anyone about restructuring. It took a long time to get any answers. Or the “offer” didn’t do much good.
Slowly, mortgage lenders, and state and federal lawmakers are working on the problem. At this writing, a bill is pending in Congress but not yet passed to give Bankruptcy Courts the ability to restructure mortgages. Nothing is passed yet and the lending industry is fighting that change.
In New Jersey (and no doubt in other states) programs are underway to try to help. Here is what we can recommend right now:
1. Make use of the FREE HUD Foreclosure Avoidance Counsellors to help you. However, we also recommend that you do steps 2-4 below at the same time.
2. Start with a careful personal budget to see what you can afford. See our budget forms
3. Avoid any company or person that promises quick fixes or high fees.
4. Ask and inquire on your own. Find out who to talk to, what their standards are, when you can expect an answer.
5. Consult with a qualified attorney for a careful analysis of all your needs. Please feel free to call us at 856-596-2828 for a free initial consultation about making the right choice for you.
Landlords and Property Owners or Investors
If you are a landlord or an investor with real estate to sell, or which you want to buy, call us for advice and help. We have the experience and knowledge to help you.
If you need to foreclose on a mortgage, we have the experience you need