DFW Real Estate Investing

I've begun investing in residential real estate here in the Dallas-Ft. Worth area.

Special areas of interest are helping homeowners who are having trouble keeping up with their house payments.

Many people are behind in payments these days and may be facing foreclosure action.
Because of embarrassment and lack of experience with this sort of situation, far too many homeowners wait until it's too late to do anything about their situation.

What options are there?

1.  Loan modification.  This is an approach that on its face makes a lot of sense.  But in reality, it takes a great deal of time, usually.  Often the borrower winds up worse off than they were before.  If their employment situation doesn't change, they may still face foreclosure even after a loan modification has been done.  A friend of mine went through this process and wound up losing all of her 25 years of equity.  To make that worse, she still wasn't able to keep the house.

So while, this is definitely an avenue to pursue with your lender, make sure you understand from them how it will work.

2.  Bankruptcy.  Many people choose this option and it may be the only option for many folks.  However, most people do this to save their house and later learn that it did nothing for them.  For most people, their home is their biggest monthly expense.  If they get behind because of unemployment, it can become an insurmountable monthly expense.  So they file bankruptcy, looking for a way to save their home through lower payments or other arrangements.  Sadly, what happens for many people is they "fall out" of bankruptcy.

What does "fall out" of bankruptcy mean?  The court will take into consideration the items the bankruptcy filer wants to keep (and pay for).  They will add up all the back payments due (on home, car, other items the filer wants to keep).  The total is divided into a specified number of payments and those payments are added to the original payment due on the items.  The filer is then required to make current payments going forward but to make current payments on that back payments!  Since the filer was in trouble to begin with, making in effect nearly double payments is impossible.  Since the creditors are stopped from any other action so long as these payments are current, these creditors stay right on top of these payments to be sure they are on time.  If the payments are not on time, the creditors can and will file with the bankruptcy court for a release from the bankruptcy restrictions and will be allowed to pursue the filer for full payment.  In effect, the bankruptcy is voided. 

3.  "Throwing the keys at the bank".  Many people just walk away from their home, thinking that will absolve them of further responsibility.  Well, the lender will pursue them, foreclose and repossess the home, and try to resell it to get their funds back.  If the lender does sell the home, it is typically less than the mortgage balance so they will still pursue the original borrower for that balance, plus interest.  In the meantime, there are IRS consequences that will impact the original borrower.

What other options does a homeowner have? 

One of the hardest things to overcome here is the denial the homeowner may be in.  Often, the homeowner just cannot accept the fact that they quite likely will lose the house.  It is very difficult to have put years of care and love into a home and then to lose it and go away with nothing.  There are the memories of growing children, parties, family gatherings that took place in the home.  It's very similar to the grieving caused by the death of a loved one and goes through the same stages:  denial, anger, bargaining, depression, and finally acceptance.

Nevertheless, actions can be taken that will lessen the financial and emotional impact of the loss of a home, but they are not easy to make.

1.  Sell their home themselves.  While they are still in the home, they can certainly list it for sale, either with a real estate agent or to sell themselves.  If they can find a qualified buyer, then everything will follow the normal steps for buying and selling a home.
2.  They can rent their house to a tenant and find a less expensive place to live for themselves.  This will definitely buy them some time to deal with the house and relieve them of that monthly expense.
3.  They can locate an investor who is a cash buyer for their home.
4.  They can locate an investor who will help them stop foreclosure by initiating a short sale procedure.  Short sale work can take from 4 to 12 months but during this time, foreclosure proceedings stop.  When the short sale work is completed, the investor buys the home.  The homeowners have gained the time needed to plan for their future and to find a new home for themselves,  not be forced out by foreclosure.

I work with a financing partner doing short sales to help people avoid foreclosure and avoid IRS penalties.  For more information, please call 469-293-1341