Foreclosure Mortgage Lenders
Foreclosure is the legal action pursued by lenders for recovering the balance amount owed to them by the borrower. They take ownership of the foreclosed property and sell it to recover the amount or cut down their losses.
Facing foreclosure is a very emotionally draining experience for homeowners. Irrespective of the type of foreclosure – the power of sale or a judicial foreclosure causes a great deal of stress. But homeowners must not consider this to be the end of the road. They can still look at a few options at their disposal. Seeking help from foreclosure mortgage lenders is one among them.
When you are in the midst of a foreclosure process, getting a loan to clear your debt and prevent losing your home can be a daunting task. The traditional money lenders like banks and credit unions often turn down mortgage loan requests from such homeowners. The homeowner’s poor credit score due to the foreclosure proceeding is the leading cause for banks not granting the loan.
Fortunately, foreclosure mortgage lenders come to the rescue of homeowners during such trying times.
Who are foreclosure mortgage lenders?
These mortgage lenders offer loans to people even if they have a poor credit report. To avail this type of loan, homeowners must have at least a 10% equity stake in their home and a steady income source. If the borrower satisfies both these conditions, foreclosure mortgage lenders will quickly approve the loan. You can thereby use the amount to avoid foreclosure. Many homeowners resort to this option during the redemption period.
The tenure for such loans is much shorter compared to traditional loans. This kind of loan helps you buy extra time to sort out your finances and continue staying in your home. Moreover, as you can prevent foreclosure with the loan amount, you can avoid any serious damage to your credit score.
The short turnaround time for procuring such loans is very attractive to homeowners. Those who are running out of resources for funding their mortgage payments, legal fees, and property taxes. Additionally, such mortgage lenders are also open to giving loans against properties that traditional lenders disapprove of. Some of the properties against which you can get an alternative loan are as follows:
- Vacant land
- Construction mortgages
- Damaged homes (foundation, fire, and water)
- Commercial properties
- Pre-fab construction homes
As is evident, foreclosure mortgage lenders are quite unlike the big banks who only focus on good looking properties. They are more flexible and accept properties that come with inherent challenges too.
Type of foreclosure mortgage lenders
There are 3 types of alternative mortgage lenders:
1. Private Individual:
These kinds of mortgage lenders are people who have extra funds and like to invest in real estate. Such individuals are more comfortable putting their money in the housing market than in the fluctuating stock market. The higher returns are the main driving force for such people to lend their money. In most cases, the return is more than what is typically offered by the banks.
2. Mortgage Investment Corporations
When private investors form a group and invest their money in a company, it is generally called Mortgage Investment Corporations (MIC). The company then utilizes the pooled money to fund mortgage applications on a case-by-case basis.
3. Syndicated Mortgages
They are like MIC, but they fund large scale projects. Syndicated Mortgages often fund several projects at a time.
Steps for getting a loan from foreclosure mortgage lenders
While the exact process may be different, here are some of the steps that are usually followed for obtaining a loan from such foreclosure mortgage lenders:
1. Tell them your side of the story
Any lender willing to lend you money will want to know about your financial situation. Thus, they will ask you how much money you have in your account, your equity stake in the real estate property, and how you plan to pay back the loan at the end of the term.
Apart from this, they will also be interested in knowing about your cash flow situation. This helps them ensure you have enough resources to make the monthly payments and honor your other commitments. Based on this information, an experienced mortgage broker will suggest which lender to approach and help you get an appointment.
2. Prepare a current appraisal report
Most private mortgage lenders need a current appraisal report to get the ball rolling. If this report is not available with you, any document that describes the current market estimate of the property can be usually given to the lender. It is important to share such a document with the lender as they issue the loan against it.
3. Initial negotiation
If the lenders express an interest in your story and appraisal report, you will be ideally called for a meeting. In the meeting, they will provide you information about the terms and conditions of the loan. The interest rate, the loan’s tenure, and the monthly payments are some of the general issues discussed.
It is in your best interest to showcase the property in a good light to get the loan. But, refrain from giving out any false information for obtaining the loan.
4. Applying for the loan
If the meeting is fruitful and the lenders are happy to give you the loan, the next step is to fill in the loan application. As part of the process, they will provide you with a list outlining the documents required for releasing the loan. Some of the documents typically requested are:
- Employment letter
- Proof of equity/down payment
- Tax papers
- Purchase offer
5. Submission of the request
It is a common practice to put the mortgage application along with the supporting documents in a file. A cover letter outlining the loan structure, and the risks will also be part of this file. When the lender receives the request, they will perform an in-depth analysis of your loan request. They will discuss with their internal credit groups about the merits of your case.
6. Issue of Commitment to Lend Letter
The lenders will issue a Commitment to Lend Letter if they accept your mortgage application. This letter will clearly mention the conditions of approval and the latest appraisal of the property. The services of an approved appraisal firm are usually enlisted for this purpose.
7. Fund release
It is vital to follow the conditions laid down by the lender to get the loan. Once the conditions have been successfully met, you can meet with the lawyer and sign on the dotted line. After all the formalities have been satisfactorily completed, the amount is typically handed over to the borrower.
Foreclosure sets the clock ticking, and you must take appropriate measures to avoid losing your home. Here are a few expert tips to avoid foreclosure:
- Maintain contact with your lender- If you face a financial crunch, get in touch with your lender and inform them of the same. Based on your previous transaction history, banks are often willing to give more time to their clients.
- Ask for a loan modification- Some lenders offer loan modification schemes to their clients. Such schemes make repaying the loan more affordable for the borrower.
- Consider bankruptcy- Although filing for bankruptcy is not a permanent solution, it halts the foreclosure briefly. However, do get in touch with your lawyer before resorting to this measure.
- Explore alternatives- If your mortgage application is being repeatedly rejected by the banks, explore the options presented by foreclosure mortgage lenders to get out of a sticky situation.
If, despite your best efforts, selling your house is the only solution, do contact us. We buy houses for cash! We do not charge any service fees or commissions. Our process is quick and efficient. When you sell the property to us, you can rest assured in the knowledge that you will receive cash in just 5 days after calling us. So if you prefer this option, pick up your phone and call our representative today!