Joining the many in financial trouble....please tell me everything you know about foreclosing?

Question

I have an ARM going up. Not qualified for help with the new fed bill. Lender not willing to modify. Short sale may be an option but they aren't selling around here. If I'm stuck with a foreclosure, what advice do you have? What should I expect? Can or will they sue me? How long will it take? I don't want to move out until next summer and could probably make a few more payments (3-4). What should I do?

Answer 1

First good luck to you.  I have been in a similar situation except loan modification was not an option as I had to move out of state for my job.  I also could not short sale because of the market where I lived.  

Would renting the property be an option for you?

Before going into foreclosure, consider a deed-in-lieu whereby you deed back the property to the lender.  They avoid the expense of foreclosure; you don't take quite the hit to your credit as a foreclosure.  It will stay on your credit report 7 years.  Best projection from my web browsing is that it will drop your credit score about 200 points.

For a deed-in-lieu, you will need to write a hardship letter to the lender explaining the facts and provide financial information including bank statement (usually 3 months), proof of income, and information about your expenses.

Property must be in good condition.  Lender will do an appraisal of the property as well as require a title search.  It can get complicated if there is a second mortgage on the property.

Most lender's web sites say the process takes between 75-90 days; mine is just at approval stage and has now taken nearly 5 months.  

It would depend on backlog of the lender and backlog in your state to determine how long you would be able to stay in your home.  If you are only able to pay through November, I think holding on another 6-7 months would be extremely optimistic.