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Four things to do NOW if your home is in Default

June 16, 2008

Todays market is full of uncertainty – exacerbated by the media – and people are ostriching. You know what an ostrich does when it’s afraid, right? It puts it’s head in the sand.

I’m not sure how great a strategy that really is for an ostrich but I know that for someone in default; that’s the way to lose your home.

I had an example of that this morning. I had spoken with this gentleman last week and I’d given him a list of information that I needed from him. I told him I would work on it first thing Monday and I needed it all faxed in by Sunday at noon. This morning I went to work on his file and there was nothing there. This is a man that stands to lose two houses within the next 45 days if he doesn’t figure something out and he failed to do ANYTHING. He ostriched.

We humans act irrationally when we are afraid but please, now is not the time to stick your head in the sand. Here are four simple steps that will get you on the path:

1) Analyze the facts. Take a plain piece of paper and fold it down the middle. On the left write “assets” on the right write “liabilities” then write down every asset you have; bank accounts, retirement, your rolex, your SUV, even your furniture. [I had a client sell all her living room furniture. It was over the top Louis XIV and fetched a pretty penny. That and her wedding ring [her husband left her and left a pile of debt] got her out of default.
Now fill in every liability, including loans from mom, cars, lines of credit, that jewelry credit line, everything. Now add up the left, and up the right and subtract the liabilities from the assets. If you come up with a negative number, you are not alone. Now you know the truth of your situation.

2) Consider your options. There could be more options, depending on your situation but, these are the ones I present:

* Bring your loan current; pay back payments + penalties.

* List your home for sale; we can work a quick sale – even without equity, even in this market.

* Sell your home directly to a qualified investor – if you’ve waited too long.

* Refinance or Renegotiate your loan- We have an in-house specialist that rocks!

3)Consult a trusted advisor. And I am not talking about me! 🙂 Most people have someone to talk things over with. It could be your tax guy, mom/dad, uncle, someone at work… Just make sure this is someone that you trust with your truth. Foreclosure can be very embarassing and it’s common to be ashamed. We think we should have been able to see the future. To know that someone could die, or get divorced, have an illness or lose a job. The truth is thing happen and when it’s you, you are emotionally involved. Go to your trusted advisor, your neutral third party, and see if there are options you overlooked or other avenues you need to research.

4) Hire a Professional. Once you’ve done your homework, hire the best you can hire. I just had a guy that wasted 5 weeks with a lender that couldn’t do what they promised. When you are in default, you don’t have 5 weeks to waste. Hire someone with a proven track record, that’s seen a few cycles, that knows how to get the job done with your best interests in mind. I know for me, there are many times that I could have “just sold the house” and made a commission but, instead I helped my client see their options. Maybe they could refinance or pull some money out of an IRA, or sell the big car to get them back on track. So, get a personal referral, google the person, check their references, hire the best. It does cost a little more to hire the best but, if you were getting a heart bypass do you want the intern running a $995 special or do you want the professional that has had a twenty year career and hundreds of healthy happy clients?

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