Mortgage Woes? Trump says ‘Fight the Bank, & Now is a Great time to buy!’
Great advice from the ultimate real estate pro
We ordinary citizens have most likely watched Donald Trump for how-the-other-half-lives entertainment, more than for financial advice. I watched Donald Trump's interview on ABC's Nightline last night. I've never believed that he and I would ever have anything in common professionally. The rare air he breathes in Manhattan is far grittier and spendier than the pine scented air I breath in Oregon. Still, I was pleased that his thinking echoes mine regarding the real estate market. He gave some simple and very good advice...for free.
He says to get in there and buy now. Now is a great time to buy. The Trump family has epitomized the term Smart Money, starting with his father and becoming epic with Donald. The truth is the real estate market only slumps every so often, and not for long. Look back into history, and you don't have to look back too far.. An investment in real estate is an investment in a limited commodity. They are not making any more land, but there are more people who want to own property as our population grows.
Regardless of the number of struggling borrowers, who do affect values....this can be a good thing for the savvy investor, whether you are building a portfolio or just moving to a more suitable home. There are still plenty of people who are financially sound who are in a prime position to make money in this market. What we are witnessing is the beginning of another buy-low-sell-high cycle.
Regarding foreclosure, The Donald says never leave your home while you still own it! Fighting the banks is something I would imagine Trump has amused himself with on many occasions. He says, and it's true, the automated computer letters from the banks are standard threats. They really don't want the work and expense of taking your house back, so you should make every effort to negotiate a reduction of interest, and/or debt. By law, banks cannot hold onto foreclosed homes beyond a certain time limit and a certain cumulative value. REO means "real estate owned" in a bank's portfolio...and the Feds limit it. And a lot of banks have portfolios of REO's that are bulging. The banks have been lobbying for years to change those REO laws to their benefit. That would be a very bad thing for borrowers. If those laws changed the banks would not be so compelled to work with borrowers.
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You CAN negotiate a better deal! Don't ostrich!
When negotiating with your lender aim to restructure terms that can give you a way to hang onto your house, extend and/or lower interest rates, eliminate pre-payment penalties. It's being done every day. And remember they have professional negotiators on the other end of the phone ....this won't be like when you applied for your loan, usually in person with someone who wanted to sell you a product for profit. These will be hard bargainers, so moderate your voice, remain calm (breathing, pauses tone and pitch all count here) and don't get re-negotiated into terms you still can't live with! It may take several phone calls, and several "last offers", but hang in there till you make it work for you. If it doesn't work out, you still have options other than foreclosure.
Six major banks are currently volunteering to help borrowers restructure their home loans, working with the oversight of the U.S. Treasury Dept. Project Lifeline gives borrowers who are at least 90 days behind on payments a 30 day freeze on the foreclosure process in order to re-negotiate with their lenders, or otherwise settle the debt. All one has to do is call their mortgage holder and ask for the program. Look it up online for information, but I would beware the sudden number of financial institutions that are marketing Project Lifeline. Some states have, or are currently enacting laws against predatory lending, check your state. And every state has different foreclosure process laws. You should know exactly what your time-lines and options are. If you're still confused have an attorney review your situation. Here a link to all the states' foreclosure laws:
Don't fill out any forms online, or give out personal info, OR allow a credit report to be run, until you have talked to your lender. But you are better off making call that as soon as you know you can't make a payment, and can always use Project Lifeline later. This would apply perhaps if you were trying to sell your home in this slower market where it will probably take more than 30 days to sell. And it is always better to sell and pay off that debt. Avoid foreclosure on your credit report at all costs. It's emotional. But settling your debt and moving on with a plan for the future is paramount. Be realistic...there are differences between being a little stretched out.... and being a credit junkie.... and being a victim of predatory lending.
Options to Foreclosure...SAVE yourself!
If you are truly over extended, loaded up on credit cards and other debt you can try to negotiate livable terms on those accounts, too. Same rules as dealing with your mortgage company. Some borrowers, especially those with medical debt, can get some relief through the bankruptcy courts that can often set up a plan whereby the debt can be managed and paid off over a period of years. And frankly, if it were me, I would certainly make that mortgage payment before I made a credit card payment, but then I would make some quick moves to pay off those cards. I would sell any loose assets I had to an use the money to pay down debts. If I could manage to pay off a few credit cards it could mean the difference between being able to re-finance...or selling and moving on. Jewelry, cars, furniture....all mean less to me than my home and financial well-being.
If you cannot achieve a logical meeting of minds with your lender you have two other options that can keep the word foreclosure off your credit history. Sometimes the lender will offer you a Deed in Lieu of Foreclosure; you hand over the house, move out, and thereby eliminate the time and expense of foreclosure for both parties. (I have even seen the lender give the occupant cash to leave by a certain date). So foreclosure is not on your record. But if you have a second mortgage, that debt will remain, often as a recorded judgment against you personally. BUT you may be able to negotiate with this lender, too. Whatever credit clean up you must do will eventually lead you to a point where you can manage your finances and establish good credit....buy another home.
Short-sales are becoming more and more common in some parts of the country where the home cannot be sold for what is owed on it. This is also a fine-tuned negotiation. You market your house and negotiate the short sale with the lender. Some lenders will tell you ahead of time what their bottom line is for getting out from under the property. But remember....they do not want the house back! A Realtor can help you with information about short sales.
So Donald Trump has good advice. If you're struggling with your home loan, fight the bank! If you can position yourself to invest, buy NOW.