If you're working with a homeowner that has received their lis pendens for foreclosure but have equity in their home, how do you get them out of foreclosure? Many families are unsure of what to do next and sometimes become very emotional at this point. In fact, some families will spend a lot of time trying to acquire a foreclosure attorney. The good news is you can help the family avoid foreclosure without having them spend additional money on things that aren't necessary.
Foreclosure is where the family stops making payments to the bank and is still in possession of the home. After the homeowner has stopped making payments for 90 days, the bank will issue a lis pendens to the homeowner. It is an official filing of a lawsuit regarding the mortgage. Once this occurs, the family is in pre-foreclosure and will need to eventually appear for the summons to explain why they are in foreclosure and what they intend to do. There is one last stage which is where the courts will issue a final judgment and a date where the home will go up for auction.
Families facing foreclosure are going to fall into two categories. The first category is with a family does not have equity in the home but are still seeking a way out of their situation. The second is where the family does have equity in their home and are interested in avoiding foreclosure but are trying to recover as much value as they can. This stage in the process is important because homeowners do not want to waste any time because the bank can attach penalties the longer this goes on.
The first thing you can help the homeowner do is to order a payoff with the bank. A payoff is an essential step because it will allow the family to move forward but have a 30-day hold on any fees and penalties. The penalties from the bank can be steep because they will charge the homeowner for interest on a daily basis. The bank will also add in the attorney fees they'll incur. It means the homeowner is paying money out of their equity for the cost of the banks' attorneys. Often the bank will also attach additional late and administrative fees.
It's also important to note that it is a lot easier if the homeowner files for the payoff themselves. It's a lot quicker and more efficient. It is possible to have the family assign somebody else to order the payoff, but it is a long process and very costly because of the delays. A lot of paperwork is passed around to have someone else authorized when it's just easier to order the payoff right away.
Every day that passes without ordering the payoff can become very expensive. Over the course of 6 months, these fees can add up significantly and ultimately cut into the equity that they were hoping to get out of the property. Working with the family to help them understand a clear game plan early in the process is essential because this can allow them to move out of foreclosure without having to hire expensive defense foreclosure attorneys. Working with a network of investors has its advantages because the attorney fees are lower because they're working with these situations on a daily basis.
In conclusion, investors can play a prominent role in helping families escape foreclosure. The investor can help a family recover as much equity as possible by ordering a payoff. The payoff will allow the investor to sell the home within 30 days without incurring additional late fees. The sale can also go through without inflated foreclosure attorney fees.