Stop Foreclosure - News, Tips and Resources

Financial Links

2007-11-07T19:13:00.001-05:00

Our primary focus is to help homeowners who are currently in foreclosure. But what if we could help homeowners BEFORE they fell behind?

The best way to get through the tough times is to "Expect the best, but plan for the worst".

Here are a few great resources to improve your financial life, regardless of your housing situation:

Monitor your income and expenses each day (www.mint.com)

Is it better to Buy or Rent? (www.nytimes.com)

Savings Calculator (money.cnn.com)

The true cost of an iPhone... and other purchases (blog.mint.com)

Retire with more money than Britney (money.cnn.com)

Short Sale Tax Issues

2007-10-15T17:10:00.000-04:00

Most homeowners who 'short sale' their homes owe the IRS money. Homeowners who 'short sale' their homes through Benefacts don't. Read on to find out how...

So you're behind on your mortgage and your house value is declining because of a slow market. Now you owe more than your house is worth. You don't see any way of making up your back payments, let alone this month's mortgage. Everyone you have talked to says the same thing: "Find a new place and see if the bank will do a short sale. You may still have a mark on your credit, but at least you won't owe any money."

In a way, they're right. There will still be a mark on your credit, but it won't be as severe as having a full-blown 'Foreclosure' flag for the next seven years. The bit about "not owing any money", however, may not hold water.

A short sale is when your lender agrees to accept less than what is owed as payment in full. So let's say you have a $100,000 mortgage, and since your house value has declined slightly, it is only worth $90,000 today. Selling your house conventionally (through a Realtor) would cost you AT LEAST $10,000 - probably more. However (in order to avoid foreclosure costs on their end), your lender MAY accept an offer below $90,000. The process of submitting and having a short sale accepted is an art, and only works in certain situations - but it has saved many of our clients from financial ruin.

As mentioned above, if/when a lender accepts a 'short sale' offer, there are SOME financial implications. The most common (in our experience) is what is known as a "1099/Forgiveness of Debt". Let's say a lender accepts $75,000 as payment for a $100,000 loan. Those parties who were on the loan (you) MAY be sent a 1099 tax form at the end of the year for $25,000. Why? Since the lender "forgave" $25,000 of your debt, the IRS views this as "phantom income". This means you may have to pay taxes on that amount even though you didn't actually make an extra $25,000 this year.

For most homeowners, they would owe the IRS an extra $6,250 ($25,000 at 25% tax bracket) come April 15th. However, Benefacts has created a way to minimize or eliminate this extra tax in most circumstances. If you are considering a short sale to avoid foreclosure, contact Benefacts today to find out how you can avoid paying unnecessary taxes.

Why I Love My Job

2007-10-09T17:03:00.000-04:00

According to recent studies, somewhere between 70 and 80% of Americans don't like their jobs. Think about that for a second - 8 out of 10 people you meet would rather be doing something else for a living! Are you one of the 80%?

Luckily, Benefacts is a different kind of company. There are three main reasons I LOVE my job (yes, I really do love it - they aren't paying me to say this):

1.) I help people EVERYDAY.
Some of my friends and family think it would be tough seeing homeowners face such difficult financial situations all the time. But that's a little like saying it is tough being a doctor because you deal with sick people. Like doctors, we don't focus on the negative - we diagnose a problem, identify a solution and don't stop working until our "patients are healthy".

2.) I help my community.
Working for Benefacts is my way of giving back to the community. By helping individuals and families get back on their feet, we improve the quality of the community morale and finances at the same time.

3.) I make money doing the right thing - NOT by "making the sale".
Many so-called "real estate investors" are in the foreclosure business for one thing - to make money. The only time they get paid is when they buy and sell a piece of property. At Benefacts, there are no incentives to persuade homeowners to sell. In fact, the opposite is true - our employees are paid by explaining all of the options that are available and giving the best advice possible to each individual situation.

Why waste your time working with people who are out to cash in on your misfortune? Call Benefacts today to learn how we can help.

What Are Your Needs?

2007-10-08T16:09:00.000-04:00

Many of the homeowners we meet with for the first time (understandably) have the same mindset: "We have to keep our house!" But do most of them want to keep their home for the right reasons?

Do most homeowners want to keep their homes out of physiological necessity (the need for shelter), or because of esteem issues (status and respect of others)?

In 1943, psychologist Abraham Maslow presented a paper (A Theory of Human Motivation) as an explanation to human curiosity and motivation. In this paper, he explained that certain basic needs (food, water, shelter) must be met before a human can worry about other needs (Safety, Love/Belonging, Esteem, Self-Actualization). This theory was titled The Heirarchy of Needs.

We understand homeowners need a place to live - it is one of the most important basic human needs (as defined by Maslow). It is our job to help homeowners keep their current homes.

However, there ARE times when temporarily downsizing from your current home makes the most sense. A smaller home or rental would undoubtedly fulfill that basic requirement and would allow people to carry on with their lives. We have been a part of many success stories where homeowners temporarily downsized to get their lives back on track.

From an Esteem level, however, the choice is not so simple. Our culture has placed such an enormous emphasis on status and personal belongings that the "embarrassment" of losing a "big home" must be avoided at all costs. It is our experience that this is not the case at all.

So if selling your home makes the most sense but you are still a little reluctant, ask yourself this question: "Am I trying to stay in this house because it is the ONLY place I could live, or am I just afraid of what my friends/family will say?"

Cash is King

2007-10-02T18:10:00.000-04:00

There is a saying in the housing industry:

"You can't eat equity."

Equity is the difference between how much a home is worth and how much the homeowner owes against the property. So let's say you own a property worth $100,000 and you owe $75,000 (usually in the form of a mortgage). This means you have $25,000 in equity.

Having $25,000 in equity, however, is NOT the same as having $25,000 in the bank - for a few reasons. First, your money is illiquid (that which cannot quickly and easily be converted into cash). Too often, we help homeowners who have some equity (20% or more), but are completely strapped for cash. They may be sitting on $30,000 in equity, but can't make their monthly mortgage payment because their cash situation is so tight.

One way to avoid falling into this situation is to carefully consider how much money you use as a down payment when purchasing the property. Believe us, it is far better off to put too much down than nothing at all (100% financing deals are the most likely to go into foreclosure) - but you should keep a little extra money in the bank as a cushion should anything change. The general rule of thumb is to have 3 months worth of living expenses in a savings account at all times.

So how does this effect you? If you are having a difficult time paying your monthly bills but have some equity in the house, consider cutting your expenses first. Do you really need all of those cable channels? How about the car (monthly payments and gas expenses may be adding up to more than you expected)? Bad shopping habits? Trimming any unnecessary costs from your budget should get you on the right path.

If cutting your expenses still doesn't help - consider talking to one of our Solution Specialist. They will be able to help you analyze your situation and decide if refinancing (and converting some of your equity into cash) will help, or if it will put you further into the hole.

Who's Number One?

2007-10-01T13:30:00.000-04:00

Our culture is obsessed with rankings - college football teams, box office ticket sales, the most expensive celebrity weddings. There are times, however, when it's not good to be "number one".

Local newspapers, television stations, and websites have become more and more interested with Ohio's foreclosure ranking lately - as if it is something to be proud of.

It doesn't just happen in Ohio either. We have traveled all over the country to attend seminars, training sessions, housing market conferences, etc., and more often than not the hosts boast the same (fuzzy) statistic:

"(Our State) is number one in foreclosures this month!"

Aside from the fact that the statement probably isn't even true, we can't understand why is everyone so eager to publicize this fact.

Why is everyone so proud that their neighbors might lose their home soon?

As far as the Benefacts team is concerned, the media should cover more important statistics like: how many homeowners facing foreclosure have been helped this year?, or what percentage of homeowners who were in foreclosure last month found a solution to their situation?

Welcome to the Foreclosure Prevention Blog

2007-09-27T13:47:00.001-04:00

Thank you for visiting the Benefacts Home Solutions 'Foreclosure Prevention Blog'. This is your source for up-to-date statistics, information, resources, laws and trends regarding the housing industry. Benefacts specializes in helping homeowners in central Ohio evaluate all of the different options they have to avoid losing their home.

We thank you for visiting our site, and we look forward to assisting you and your neighbors during these trying times. Sincerely - The Benefacts Home Solutions Team