The number of distressed properties facing foreclosure in the Eureka area continues to increase. Over the past 4 months, 164 homeowners received a Notice of Default, the first step in the pre-foreclosure process. Unfortunately, an additional 64 homeowners received a Notice of Sale, the final step before their property is sold at auction on the courthouse steps.  Finally, an additional 85 homes went to auction and where foreclosed on.  (Statistics retrieved from


Facing a foreclosure is a scary thing, but there are things you should do – and shouldn’t do – to avoid making the situation worse.

DO answer the phone and read your mail. Avoiding your lender won’t make the problem go away. In fact, it will only make the problem worse. Your lender may be able to help you, so be sure to answer the phone and read any mail they may have sent you.

DO realistically assess you situation. Are your financial problems temporary? If you are temporarily out of work and will be fine once you find a new job, call your lender. Lenders may be able to offer a forbearance or repayment plan.

DO consider your options. If you are not in position to keep your home, consider selling it before you face a foreclosure. If you have already missed a mortgage payment, call your lender. There may be purchase options, like a short payoff or assumption.

DO be aware of certain financial responsibilities. Even if your lender sells your property, you may still be responsible for the difference in the sale price and what you owe. It is important to realize that you may be responsible for certain taxes when a lender forecloses on your property. However, the IRS does provide tax relief in certain situations.

DO protect your wealth. Recognize that you may have significant equity in your property that must be preserved.

DON’T move out of your home. In order to qualify for assistance, homeowners are often required to be living in their home. Be sure to talk to your lender before you think about moving.

DON’T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help keep your home; however, you only have a limited amount of time.

DON’T convince yourself you can afford a home if you can’t. Most lenders will only lend what a borrower can afford, but some less scrupulous lenders will allow borrowers to get in over their heads. In some cases, a home that was affordable becomes unaffordable due to changes in your life circumstances. Call your mortgage company; they may be able to help you avoid foreclosure by agreeing to an assumption or a short payoff.

DON’T fall victim to a scheme. Some people want to profit by your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf – for a fee.  

Reprinted from

Q & A Forum

What will a Short Sale cost me?

Nothing! In a properly negotiated Short Sale, your lender agrees to pay any of your closing costs including the Realtor’s commission. In some situations, your lender may also agree to pay some of the buyer’s closing costs.  Very few real estate agents have obtained the training and skill for these unique negotiations. How does a distressed homeowner know whether a real estate agent is truly qualified to facilitate a short sale? Look for an agent with a CDPE designation.

How long does a Short Sale take?

Depends. Once a purchase offer has been submitted some lenders are responding quickly. In a recent negotiation the lender tendered acceptance within 4 days. Another lender had taken 90 days. All lenders are overwhelmed with the amount of Short Sale offers they’re processing. Each is unique. After we receive lender approval, escrow is opened and typically closes within 30 days.

I have a first and second loan and owe much more than what my house is worth. Can I avoid a foreclosure and participate in a Short Sale?

Yes! Many of the Short Sales we’ve negotiated included multiple lenders with loan amounts much larger than the property’s current value. Lenders understand that a property will only sell for today’s market value. As long as an offer is reasonable, lenders would rather enter into a short sale than take the property back at foreclosure and attempt their own REO sale in the same market.

Dean Kessler is The Broker/Owner of RMK Realty, Inc and The Kessler Real Estate Team in Eureka. He has earned the prestigious Certified Distressed Property Expert (CDPE) designation at the Distressed Property Institute in Florida and is uniquely qualified to help homeowners in financial distress.