Consider Renegotiating to Stop Home Foreclosure!

I just spoke to a small business man who found one of my “we buy houses” ads.  He wants me to step in to stop home foreclosure and take his house.  I discussed it with this gentleman for little bit.  He has got a similar story to most of the folks I talked to who are in a pre-foreclosure state.  He’s not yet behind on his payments, but he will be soon unless he gets some relief from his mortgage.  He needs some kind of bailout plan. He wonders, if the big companies all got a bailout, why don’t I get one?  Not knowing what to do he calls me and asked me to buy his house.  He gives me the opportunity to buy his house for no money down.

His house is in a small, working class town.  The payment is quite reasonable, if not a small payment for somebody who’s in business.  The payment principal interest taxes and insurance is just over $1100.  He did have some equity in it when the market was up but now that the market is down is about even with his mortgage.  How do we bail this guy out of his mortgage?   His initial thought was, “I’ll sell my house to Mark.  I get out of the house, and then I don’t have to worry about that foreclosure issue.   If we do it pretty quickly, I won’t fall behind in ruin my credit”. 

I continued  asking the standard questions , the ones about, how large is the house,  How many bedrooms, how many baths, what’s the size of the lot, how old is the house, how old is the roof, tell me about the plumbing.  Then I get into some other questions, the ones that you need to consider if you’d like to stay in your house, and you’d like to figure out how to bail out the mortgage or get the bank to stop home foreclosure now. 

The next question I asked him was, “where are you going to move?”  He told me he was going to need to rent something and I asked him how much rent would cost him in the new location.  He felt $700-$800 a month to rent a house of the appropriate size.  Since he’s a small business person, just any old house won’t do!  He needs to have a place to park his truck and a garage to store his equipment. Without a large enough garage and room for the truck, he will have to rent space for that, negating his savings.

Then I asked him if he refinanced in the last three years.  This is a critical distinction because a homeowner may have certain rights that expire three years after refinance.  This is a major tool we can use to stop home foreclosure.  As it happens, he had refinanced a year ago with GMAC.  Now we are getting somewhere.

I want to know if he would stay in the house if he could afford it.  It may seem like a silly question, but some folks have already given up by the time they call me and the only thing left is for me to do is buy the house.  In the case of this gentleman, he would stay. 

Now I want to know how much he can afford to pay monthly for his housing.   He tells me that he could afford the $800 mentioned above, moreover; if he can suspend payment altogether until March 1st, he will be able to afford the whole thing!  He knows that his business will turn around in the spring, not only because it is his busy season but, he has contracts already sold and scheduled to begin then.

The next question is the coup de gras. “Mr. Seller,” I ask. “Have you tried to RENEGOTIATE your mortgage?”  He responds, “I can do that?” Well, in a word, yes!  It amazes me how many people in the USA need to stop home foreclosure and never think of renegotiating.

It is clear from the conversation with this gentleman that he may not need me. At least, not yet. 

Mark Elkins