Will there be more moratorium?
Have your life circumstances changed? Are you experiencing a financial rough spot? It’s happened to me, and I’ll tell you, I felt like a deer in the headlights; –scared that I was going lose my house and all the money I had put into it from my hard work over the years…
If you owe money on a property that is behind on payments ( and there are thousands of folks in the Puget Sound area that are keeping you company)—lenders will begin foreclosing proceedings just as soon as the law allows; perhaps as early as April 1, 2021. The sad thing is, homeowners stand to lose their credit worthiness for years to come. And even with the latest forbearance programs many folks will still lose their home, as well as any remaining equity they still have.
I’m Jerry from JR Berger Properties. I’m going to speak plainly to any of you in our community who might be behind on your mortgage payments and who may be thinking of staying in their home indefinitely because of the Covid-related moratorium on foreclosures. Do you have a plan of action?
(Disclaimer: I am not an attorney, and cannot offer you legal advice. Please consult with your attorney if you have questions about the content of this article.)
The best, big first step is to educate yourself on all the options available to you. You may qualify for a mortgage forbearance plan, a limited mortgage reduction plan or other state or federal relief plan. In most of these programs you will be required to repay any missed or lowered payment amounts. Start by checking out what the State of Washington has to offer. FHA loan forbearance changes are described here.
There is an old saying: “The mills of the gods grind slowly, but exceedingly fine”. What I’m getting at is this: If you are behind on your mortgage obligation, then sooner or later your time of reckoning will come. In spite of a moratorium, debts must be repaid to the smallest penny.
No matter how long you can hold out with forbearances or relief checks, the lenders will have their day. They are extremely powerful institutions. Even in the best of pre-covid times, only a small percentage of homeowners 90 days or more behind in their payments ever escaped the death star pull of foreclosure.
If you have no equity in your home, or when the mortgage balance is the same or greater than the current market value, then you may want to consider letting the “mills of the gods” do their thing—however long that may take. Maybe another foreclosure moratorium will be enacted after March . Free rent? You’ll have to decide. Your credit rating is already damaged from late payments.
The longer you wait, the fewer choices you will have.
But what happens if you have some nice equity in your home? Say your house has a market value of $400,000 and you owe a total of $300,000 on your mortgage, including past due payments—will the bank just take back your house and hand you a check for your $100,000 equity?
I wish it could work like that, but a more likely scenario goes like this:
- The bank will eventually proceed with foreclosure actions to reclaim your house. You will be given an opportunity to pay the bank all the money you owe and reclaim ownership.
- Once the bank reclaims legal ownership the property goes to the highest bidder at an auction. Bidders at auction have to pay cash, and they want a great bargain to part with their money. The house usually goes to an investor, and the bank gets a much lower price than the retail value.
- If your $400,000 house goes to auction, the bank may reclaim say, $250,000. If you owed the bank $300,000 (from our example), that would leave the bank short $50,000.
- Will the bank be glad to forget about the $50k and call it a day? Probably not. Besides losing the $50k from your arrearage, the bank will be left holding the bag for many more thousands of $ in legal and administrative costs to reclaim the property through the foreclosure.
- You may think that if the bank takes back your property, that’s the end of the story. What can happen is that you will be invited to court to answer a summons for a deficiency judgment. This is a legal action taken by the lender to force you to pay for all the money that is required to make the bank whole again.
- Deficiency judgments are no fun! They work in a similar way to a judgment against someone for lack of child support. An unpaid judgement can be turned into lien against any future property you own, or could be turned over a collection agency who is skilled at making debtors lives miserable.
It is no exaggeration to say it is quite possible to lose all of your equity and also come out on the losing end of a judgement. Don’t wait out the end of the moratorium period and risk losing all of the equity in your home.
The Alternative—Act NOW!
I’ll make no bones about it. Cash home buyers like my company, JR Berger Properties, are here to help people who find themselves stuck with real estate obligations and need to move fast to save what can be saved from a deteriorating situation.
If you are behind on payments, have quite a bit of equity, and also have the luxury of time, we recommend consulting a good realtor. We can recommend several excellent people. In this setting, you will very likely get more money by listing with a realtor IF you have the weeks or months to expose the property to the market and can pay the 6% realtor commission and another 3% or more for tax and closing costs from the proceeds of the sale.
We are looking for Seattle area homes like yours, to buy directly. We’ll take on all the responsibilities. We want to fix them to rent out, sell, or sell to another investor. We have the funds to pay you cash for your property. We’ll give you a certain, fair, cash offer, and we can close quickly; often in 10 days to 2 weeks.
We specialize in creative solutions that make for win-win outcomes for everyone. Call us today at 425-200- 5219 for a free consultation. Or find out more about us at our website: jrbergerproperties.com.
Let’s explore how to make lemonade from lemons; let’s help you get free from debt entanglements and get your life started in a new direction.
Get started NOW! What do you have to lose?