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  1. #1
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    Jun 2008
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    2

    Default Should You Keep Paying Mortgage If It's Going To Foreclose

    My question involves a foreclosure in the State of: California

    I have four properties. None of which is the house I live in. Three of the houses are with one mortgage company and the fourth is with another. I'm trying to short sell one house from each company and foreclose the other two. If the short sell doesn't pan out, I plan to foreclose on all four. Basically, I'm not trying to save any of the houses.

    My questions are: Is it better to make payments up to foreclosure? Does it make a difference for my credit report? Does it matter? Can I just stop making payments?

    Thank you for your time.

  2. #2
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
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    1,404

    Default Re: Keep Paying Mortgage If Going To Foreclose?

    No matter what you do the houses or some of them are going back to the lender. Banks usually do not accept payments when a loan is in default.

    As far as your credit report;

    1) A foreclosure on your credit report will usually lower your score by approx 250 points or to the low 400's

    2) Paying on a mortgage that is in default will not improve your credit score.

    3) If you can hold onto your unsecured credit cards and pay them as aggreed in approx 2 years you can secure new unsecured credit.

    4) As the foreclosures get older your credit scores will go up if you follow #3 above. FannieMay will now issue new mortgages to people who lost homes in foreclosure after a 5 year waiting period.

  3. #3
    Join Date
    Jun 2008
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    2

    Default Re: Keep Paying Mortgage If Going To Foreclose?

    Thank you for your reply.

    If I stop making mortgage payments will that affect the way my house is foreclosed with the bank? Is there only one way to foreclose? (I hope that's not a stupid question).

    So, since I know I'm going to be foreclosing I can stop making payments now.

  4. #4
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
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    1,404

    Default Re: Keep Paying Mortgage If Going To Foreclose?

    If you are in foreclosure and the bank will foreclose even if you make payments why contiune throwing good money after bad?

    Of course you can refinance the properties, however, they are probably not worth what you owe on them now.

    If you stop making payments it will not change, speedup, or slowdown the foreclosure time frame.

    You may want to consider a chapter 7 bankruptcy to discharge the shortages of debt that you will have from the foreclosures. With so many foreclosured being filed your FICO scores will be low weather or not you file the bankruptcy. But at least this way you can move on with your life and not worry about the banks comming after you for the shortages after they resell off the houses.

    You should contact a bankruptcy attorney local in your area for a free consultation. If you do file the bankruptcy the court will STAY and stop the foreclosures process for now. It is a short stay which will allow you to either redeem the properties or give them back. This sounds like your best bet. I would suggest you contact a local bankruptcy attorney ASAP.

  5. #5
    Join Date
    Apr 2008
    Location
    Calabasas, Ca
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    52

    Default Re: Keep Paying Mortgage If Going To Foreclose?

    Quote Quoting oky
    View Post
    My question involves a foreclosure in the State of: California

    I have four properties. None of which is the house I live in. Three of the houses are with one mortgage company and the fourth is with another. I'm trying to short sell one house from each company and foreclose the other two. If the short sell doesn't pan out, I plan to foreclose on all four. Basically, I'm not trying to save any of the houses.

    My questions are: Is it better to make payments up to foreclosure? Does it make a difference for my credit report? Does it matter? Can I just stop making payments?

    Thank you for your time.
    OK, So I am glad that this post came up. OKY, don't do it, don't let yourself go like that. I hear from people all day that say that, "Hey, it's ok, let my credit go, it's already gone!", coming from a company the deals with credit restoration and bankruptcy preparation, along with our experience of working for a large lender, let me just say that you could avoid Bankruptcy. IF you don't you may be able to get it removed but chances are you could still have it stuck on your record for 7 years.

    I'm telling you that others may lead you to believe that Bankruptcy is your only choice but it's not. You have 2 options that you mentioned yourself above. A short sale or a foreclosure. You may also want to try to deed in lieu of foreclosure. Depending on your situation it is better than allowing the whole foreclosure proceedings to end with you loosing the deed to your properties. Short sale all of them. If you need a professional counseling company, get one. Get those properties sold. If you can reach a meeting of the minds you can avoid the lenders seeking any sort of deficiencies and the impacts on your credit are substantially worse. There was a point in time where you promised to pay the funds back and now you can make amends with selling them for a reasonable value. For all intents in purposes you should find agents and just sell them quick. List them and drop the price over a few weeks to make it more than competitive. Get them sold and try to walk away, without these loans chasing you for your wages or other attachments in places that may impact you. IF you don't know what to do contact an attorney.

    Regards,

  6. #6
    Join Date
    Apr 2008
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    Texas (Dallas area)
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    Default Re: Keep Paying Mortgage If Going To Foreclose?

    Since THREE of the homes are with one lender I do not see anyway out from this except for a bankruptcy. If you only sell 2 of the 3 with the same lender, you will still have the same impact on you and you will still need bankruptcy relief.

    To try and arrange short sales on four houses PLUS trying to do a DIL of foreclosure seems overbearing for anyone.

    I do believe that if it was your only property that was facing foreclosure then sure, I would suggest you try a short sale or a DIL.

    Remember the lender can do a "right to offset" clause since you have 3 mortgages with them.

    Whether a bankruptcy, OR four foreclosures your credit scores will be very low. HOWEVER, your fico scores are only held down for 24 months following a bankruptcy discharge. So if you can maintain an old credit card or two in just 24 months your FICO scores will rebound. All debts discharged through a bankruptcy have to be reported by law to the bureaus as NON IMPACT, therefore, only your bankruptcy will bring your score down and NOT the discharged debts. You can also have someone list you as an authorized user on their credit card account to hellp you in the future. Like a parent or relative. I know several people who went through a chapter 7 just 4 years ago who now have fico scores over 700.

    As you stated, you are in Calif where property values are dropping faster then a brick, so I doubt you can hire an agent to sell them, and to be honest with so many to sell it is basically not possible.

  7. #7
    Join Date
    Apr 2008
    Location
    Calabasas, Ca
    Posts
    52

    Default Re: Keep Paying Mortgage If Going To Foreclose?

    OhMy,
    I understand your point but I can not say I completely agree. The "right to offset" would play more into someone who is not behind or falling behind on all of their mortgages. The banks have to cut their losses. If they can complete a short sale or they can hire a professional counseling company to do it for them they have a chance at minimizing their losses over all. As the old saying goes "there is more than one way to skin a cat."

    I am not saying that your resolution to the problem will not work. I am just letting them know that there are other potentially less impacting options. As you are saying this will cover the homeowner not just in these properties but other potential financial mishaps that they maybe currently experiencing, I can't say selling the home will solve their issues. As we can only practice the commonly used economic idea of "ceteris paribus" because if we don't apply that there are just to many factors that we could just speculate on all day.

    As to them selling a property there is definitely a value for the properties on the market. Many to most homes have been over inflated but are still about 40% higher than homes from the 90's. Now, as many houses are on the market it is going to be more dificult to sell but they are going to have to find an agent and if necessary we could point him in the direction of one (pm me if you need on OKY). There are definitely agents that can assist him. I want to remind that this is a promissory note. He did at sometime agree to pay these back or do the best that he can to do so. If he can then he should liquidate the properties and hope to get as much money as possible for them now as they are only going to become less valuable in the next coming months to years. Bankruptcy should be a last ditch effort. It's not about just the impact but about doing the right thing as well.

    Also my final point is this. This homeowner can hire an agent (which is free), attempt to sell the home, and if there is a sale date that arises, at that time they can choose if they would like to file as being insolvent.

    Thank you for your candor and look forward to your response.

    I know what we are all looking for is the overall best solution. Many times it is only the homeowner that can really answer this.

    Best wishes,

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