Need Info On Home Foreclosure Options (short sales, mortgage, credit score)

[TomO]

My sister just lost her job and has very little in savings? She will soon not be able to pay her mortgage (she has been paying for 17 years) to BOA. Frankly, I told her that she should preserve what little cash she has (for food/utilities/etc) and stop mortgage payments immediately while she searches for another job.

Where can she go for help on what she should do in dealing with BOA? How long is the process to foreclose in Florida? I'm located out of state and am not in the position to help her financially.

Any suggestions would be appreciated.

[craigm1841]

Originally Posted by TomO

My sister just lost her job and has very little in savings? She will soon not be able to pay her mortgage (she has been paying for 17 years) to BOA. Frankly, I told her that she should preserve what little cash she has (for food/utilities/etc) and stop mortgage payments immediately while she searches for another job.

Where can she go for help on what she should do in dealing with BOA? How long is the process to foreclose in Florida? I'm located out of state and am not in the position to help her financially.

Any suggestions would be appreciated.

She can attempt to do a loan modification with the bank, which usually takes a few months. In that time, she can stop making mortgage payments. While it will effect her credit, the forclosure process will not be started. If she missed five payments and her loan modification is approved, they will just increase her monthly payment for the remainder of her mortgage. If she has only had the home five years, she will have to make up a few thousand dollars over 300 payments, which isnt too bad. This is the best option, but it is not a garuntee that she will be approved. she could end up getting stuck trying to play catch up via the next option:

She can miss a few payments and attempt to do a repayment plan, which the bank will determine based on her income and expenses. If her mortgage payment is $1600 a month and she misses 4, they will let her make up the missed payments by paying approximately half of the missed payment amount and pay an incresed amount for X amount of time (determined by the bank using your disposable income), until she is caught up. If she cannot afford to do this, there is one more option I can think of, and it is not the best, but becomming increasingly common:

She can also just stop making payments all together, and let them foreclose on the property. People with negative equity who have lost jobs have done this. It is called a "strategic default" (fancy name for 'letting' a bank forclose). Her credit will be affected by the forclosure, and she will lose her home, but she will have a place to live for free from 8 months to a year, but eventually be forced to forfiet her home.

Of course she could sell the property, or if there is negative equity on the property, attempt a short sale. She should definately continue making mortgage payments during this time.

You need to contact the bank to discuss options, as every institution is different, and every situation is different. it is likely the bank has sold a the mortgage to an investor which has a say in how forclosure procedings work. there is no set period of time on how long a forclusure takes, or which options they will let you decide from. Again- the bank is the only one who will provide you with concrete options.

[TampaKaren]

If she has no income, she can't qualify for a loan mod. And dealing with banks is horrible. They are paid to service the loan for the investors and collect a debt. She should notify Bank of America (by phone and also in writing) that she has lost her job and that she's looking for work. Keep the communication lines open...not saying anything is the worst thing to do. She should also seek council from an attorney who can give her sound legal advice and guide her on a plan of action. The majority of them don't charge anything for the first session and there are payment options if she chooses to engage their services for short selling, foreclosure, deed in lieu, etc. If you need attorney suggestions, let me know and I'll send them through a direct message.

[kbrkr]

Sorry to hear about your sisters mis-fortune. How much equity does she have in the home?

[Pragmaticus]

Originally Posted by kbrkr

Sorry to hear about your sisters mis-fortune. How much equity does she have in the home?

Probably not much. That was the first thing I thought when he said she had been paying for 17 years.

OP also try if she can sell short, which is usually less painfull in her credit score than a foreclosure. Sorry to hear that and all the best to your sister

[TampaKaren]

TomO, I read yesterday that Florida has the second-longest foreclosure process at 500 days. Here's a link to the entire article: Florida has second-longest foreclosure process

[bnepler]

One thing that most don't know about "short sales" is that if you upside down on your mortgage and the home is sold for less than financed price , you will have to pay income taxes on the difference. It can be big depending on the difference amount.

[bnepler]

best to find an attorney and see what options she has.

[HughMcs]

I would think that after paying on the note for 17 years that she should have some equity in the property. She should figure out how much more she owes on the note vs. equity put into the house to determine if it is better to do a short sale or just to walk away. I agree with some of the above comments that the bank will not modify the loan if she doesn't have a job.

[TomO]

All,

Thanks for your thoughtful comments/suggestions. I spoke with my sister again last night and got more info. She has slightly less than $20,000 remaining on her mortgage. She has yet to contact BOA, but I've pushed her to have a conversation with them about her situation. She believes that the house is worth +/- $50,000, so her best option may be to sell the house and come out with at least something. In the meantime, she's looking for work.