Your home is your anchor!
“Huge sums forge their own anchor, and our future advantage, if any, will be a small fraction of our historical edge”. Graham Bowley, in his Sunday NY Times article, quotes Warren Buffett and provides his readers with keen insight into Mr Buffett’s strategies and formulas in the face of the economic hardships during the past several years. Buffett invests much like the J.P. Morgans and Vanderbilts of the early 20th century – stocking up on capital during the good times and investing when hard times bring prices down. .jpg)
Says Buffett, “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend”.
Granted that few of us can draw personal parallels or easy comparisons to a gentleman with a company whose net income is in the billions and a share of his stock in the thousands. On the other hand, when it comes to dealing with collapsing family and personal incomes and mortgage loan payments, the underlying similarities give great hope when faced with a foreclosure or default on your home loan.
Homeowners’ crisis begins with banking excess
The beginning of this century saw unheralded dissatisfaction for the frustrated many who watched as real estate brought huge profits and lifestyle advantages to others who jumped into the market. Financial institutions literally opened the flood gates and developed a mortgage loan product for just about anyone who asked. We now move forward in this cycle, realizing the damages these financial decisions have passed on to homeowners. Mortgage loan arrears, defaults, over-valued homes and lost jobs are daily concerns in our law firm.
Even so, there are a number of touch points which allow for a process of recovery in so many cases. Our fundamental challenge is to avoid the foreclosure sale of your home. The front-line professionals, both lenders and borrowers attorneys, as well as housing representatives, all agree that the banks would much prefer working out a series of steps designed to defer the foreclosure sale. Homeowners should begin this process by meeting with an attorney or with one of the many organizations counseling homeowners in these situations. Loan modification discussions, court foreclosure settlement conferences and trial work-out or forbearance plans are good news solutions to the many clients who so courageously take plans of action.
What does it take to avoid foreclosure?
Lenders often times will take on these added tasks and forego an immediate foreclosure sale if homeowners can provide them with details of hardship, potential income, and prospective job offers. Gathering the paperwork and putting together the often daunting package of required materials can be laborious and frustrating. However, this work will often pay huge dividends. Many observers to this process foresee a huge increase in successful outcomes.
There are no “smoke and mirror” tricks to this process. It requires vast amounts of time, effort and patience, all of which are necessary as the numbers of submitted pleas for assistance to our mortgage lenders and servicers grow each day in unthinkable numbers.
What to do when the process server comes
While loan modifications are an option for many in early stage default, there are increasing numbers of homeowners who are served with a summons and complaint, requiring the intervention of a Judge and court action. Most experts agree that meeting with an attorney as soon as you are served with these court papers and presenting an answer and attendance in the court process also allows for loan workouts.
The laws in New York State provide a well defined extension to the hostile foreclosure sale. It is not uncommon to see these resources used in ways that encourage, through diligent and dedicated effort, a loan workout. Failure to answer the summons promptly can erase the many legal rights that homeowners have been granted and these rights can be exercised with great dignity and respect. There is no stigma attached to appearance in the foreclosure settlement conferences and the court staff and personnel are well sensitized and understanding in these parts.
The difficulty is greatly enhanced when dealing with client’s who have lost jobs and wages. From the lender’s standpoint, the homeowner may have decided that it is a lost cause and there is little hope. This is, without a doubt, the most difficult situation in which to create a pathway for positive solutions. Nevertheless, if properly managed and guided, and the rights of the homeowner are protected by caring counsel, this temporary income loss is frequently reversed. Experienced attorneys can present the new information and adapt to the lender’s review programs even at late stages of the foreclosure process.
The best first step: Having a one-on-one with your lawyer
Recognizing the new levels of tolerance towards mortgage loan defaults, neighbors and friends who have rarely if ever called upon the services of attorneys and housing professionals must now address the “what to do’s” when served with a summons and recognize that this is not an incurable problem.
I often get calls from homeowners I’ve never met who ask my opinion or want suggestions over the phone. I am totally without the benefit of knowing them, or their background. While I am sure there are cases in which opinions can be freely given after a brief conversation, more often than not, a one-on-one meeting is in order. In many cases, a slight pause and the wait until an office appointment can be convened is probably one of the best opinions I can offer.
When facing foreclosure on his home, a homeowner needs to realize that there are tips, benchmarks and strategies that can be discussed to save his home or soften the financial blow of hard times. Looking for courageous options and solutions often turns our conversation from a chaotic pulse of doom and gloom to a rallying point that, as Buffett says, is also an opportunity in this financial crisis.
Your home, your anchor
The huge housing debt taken on several years past, during a time of rising optimism and real estate fever, is not to be ignored. Our homes are our anchors and the loan problems we now face, if evaluated and addressed, are human problems and will be sorted out and solved by the people in government, banks, courts and neighborhoods. There is no confusion; there are no blind corners and there are no painful debates when you are faced with the possible loss of your home, commercial property or investment parcel. The property is your anchor, and if secured properly, will permit you to hold fast and face the storm of uncertainties until you can implement an effective strategy for paused consideration, unique alternatives and loan workout solutions.
