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Thursday, May 11, 2006

Plan "B"

When we sit down with people who realize they can't afford their house any longer (due to one of these reasons), we offer to try to purchase their house prior to the foreclosure. We are able to do this when no one else can because we discount the amount they owe to their lender. This we call "Plan A".

Plan "A" results in the best of all worlds in that the foreclosure is stopped and they are given a chance to start over with just late payments on their credit.

Sometimes there's not enough time to get their lender to act before the foreclosure, or the lender simply won't accept our offer. In that case we move to Plan "B".

Plan "B" unfortunately includes the lender going through with the foreclosure. Obviously, this is not the best thing to happen, but there can still be something done to help improve the homeowner's situation. The house can still be sold following the foreclosure, and there's usually plenty of extra time to do this (called a redemption period). Here's how we can help.

When the house is sold during this time, a "foreclosure - cured" or "foreclosure - redeemed" is placed on the credit report. It's not the best situation, but it's definitely better than a full blown foreclosure.

We help by getting the lender to discount the debt (just like in Plan "A"), the big difference is that we line up someone to sell it to first, then we ask for the debt discount. This allows us to ask for a much smaller discount and therefore have a much better chance of acceptance.

So, to summarize:

  1. Plan A and Plan B are the same in that we'd buy it from with the bank allowing a discount of the debt.
  2. Plan A requires a bigger discount because we'd buy it without having someone lined up wanting us to buy it from us.
  3. Plan B requires us to find someone to buy it from us first.

My wish is to always make Plan "A" work, but sometimes that's just not going to happen. In those cases, I think it's awesome that our team came up with Plan "B" instead of allowing a full foreclosure to remain on the credit report for 7-10 years.



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