Learn how to build your own Stop
Foreclosure Case file!
The best thing you can do is establish a relationship, with the lender-assigned servicing agent, based on honesty and credibility. From the moment you are first contacted you must make it clear that you intend to offer complete cooperation in developing and complying with the terms of a workout agreement.
- Foreclosure workout - Getting Started
- Preparing a Financial Disclosure Statement
- Establishing the Highest Property Value
If you believe you require or qualify for a foreclosure workout start with the following guidance . . .
- Gain the servicing agent's confidence by a answering all questions honestly.
- Disclose fully, the reason for your delinquency or default.
- Describe the extent of your hardship and provide a "get well" date (how long you expect the hardship to last)
Be prepared to provide specific information to the foreclosure prevention counselor so he/she can develop an acceptable workout plan. The counselor will probably attempt to qualify you under one or more of the reasons below so be prepared to provide important related details. Use the following information as a guide . . .
- Death of a borrower
- Unemployment and any increased expenses as a result
- Salary reduction or reduced working hours
- Loss of overtime or a second job
- If self-employed, any decline in earnings
- Business failure
- Disability or health related expenses
- Involuntary employment relocation
- Divorce
- Bankruptcy
- Incarceration
- Catastrophe or natural disaster
Up 2. Preparing a Financial Disclosure Statement
First, it's important to understand that an analysis of your financial information is needed to determine if you have assets which can be applied to the delinquent balance, and the extent to which your debt and expenses are appropriate for your particular personal, business, professional or corporate situation
To receive consideration for a workout plan you must be prepared to provide a written statement describing the nature of your financial hardship along with the following information . . .
Employment Information
- Federal tax returns for the last two years, including W-2s
- The last two months pay stubs
- Most recent bank statements
If Sole Proprietorship
- Most recent federal tax return with all schedules
- Year-to-date profit and loss statement
If Partnership
- Most recent federal tax return with all schedules
- Form 1065, U.S. Partnership Return of Income
- Schedule K-1 as applicable
- Year-to-date profit and loss statement
If Corporation
- Most recent federal tax return with all schedules
- W-2 forms
- Form 1120, U.S. Corporate Income Tax Return
- Form 2106, Employee Business Expense files with the U.S.
Corporate Income Tax Return if applicable- Year-to-date profit and loss statement, if applicable
If S-Corporation
- Most recent federal tax return with all schedules
- Form 1120-S, U.S. Income Tax Return For S-Corporations
- Year-to-date profit and loss statement, if applicable
Up 3. Establishing the Highest Property Value
Your equity is the key determinant of whether or not the lender will sustain a loss in foreclosure, and influences the type of workout solution considered to be appropriate. In order to determine the highest property value the lender will use the following information . . .
Broker Price Opinion (BPO)
The BPO is simply the opinion of an approved real estate broker or appraiser who determines the market value of your property the condition of the property, the general marketing conditions in your area, and his/her opinion of "as is" and "repaired" value.
When the real estate broker or appraiser prepare the BPO they normally capture the following information . . .
General Marketing Conditions A description of the local area and information about the neighborhood, property location, schools, and local employment conditions.
Marketability How well the home would sell based on its lot size, design, square feet, improvements and amenities.
Listings and Sales A list of similar homes in the area that are currently on the market and their asking price.
Market Strategy Establishes repair and deferred maintenance needs, determines the most likely buyer (owner-occupant, or investor) and recommends financing options.
Competitive Closed Sales A list with property description and sales data for all properties considered to be comparable to your home (condition, location and size) that have recorded closed sales within the last four to six months.
Probable Value The broker's opinion of the final selling price.
Recorded Liens A thorough search (called a Tittle Search) is conducted to determine if any other liens are recorded against the property.
Note: The services of a local real estate agent are available at no charge with the understanding that the agent will receive your listing if you make the decision to sell. This agent can supply very important knowledge about the local area that can add a great deal of value to the BPO. This becomes extremely important when developing a workout solution. You should become familiar with the current FNMA approved BPO Form so you can offer assistance and information to the agent.
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