If you are facing foreclosure, are in the middle of foreclosure or just have questions about foreclosure - please consult a licensed Attorney. Below are links which also may assist in answering some of your questions. We will be happy to help answer any questions you have regarding your current situation. If we can't help you, we will try to help you find someone who can.

If you are facing foreclosure:

You will be bombarded with phone calls from your bank. You will recieve many letters and legal documents - many of which you may not understand. But it is very important that you do understand. It is very important that you open and read every letter sent from your bank and/or your banks legal representation. Because you may not fully grasp exactly what it all means, this is the time to educate yourself. However, this can be a HUGE problem as many homeowners do not know who to call for help or who they can trust to help them. Call Consumer Credit Counseling, Call an attorney, Call a REALTOR® - do your research. Please do not do nothing!!

We believe that most all REALTORS® will be willing to do everything they can to assist. However, if you decide to discuss your options with a REALTOR®, please ask if they have ever dealt with pending foreclosures. This is important. If they are not able to help in the correct manner, find one that is knowlegeable and willing to go the extra mile.

Foreclosure happens to people of all income brackets. It happens for many reasons.
When we speak with a homeowner in foreclosure the first thing they tell us is what has happened in their life to get them in this situation. We never ask. They just tell. In no case is the story the same. Divorce, health, medical bills, job loss - it matters not. As harsh as it seems, the simple truth is, if you don't pay you don't stay.

If you can get back on your feet and start making payments - either catching up on past payments (including in some cases, fees and penalties) or through a workout plan or loan modification program with their lender, you should do so. If this is what you would like to do you need to get in touch with your bank immediately. The truth is, your lender does not want your house. They are eager to work something out with you, Make the call and see what they are willing to do to help you. DO NOT HESITATE!

Please beware of outside parties who claim they can work out arrangements with your lender for a fee. (Usually a large fee) Do not send anyone any money unless you can verify who you are sending it to and where it is going. Talk to your bank!!
The last thing you need at this point is to send in money in hopes of delaying the inevitable only to find out later that the money was never credited to your account and the foreclosure is still underway. Beware of scammers!!! See the link below.

If it is inevitable that you will not be able to keep up, your best option may be to sell your house. Don't think that you can't sell it because of financial instruments attached to the property, including a 2nd mortgage or outstanding liens and judgments. This is all negotiable. Excessive debt is one of the main reasons homeowners are unable to keep their home. In foreclosure situations, it is not unusual to owe more against the property than it is worth. In other words, you are upsidedown.

A short sale is an alternative. This is when your lender is willing to accept less than what is actually owed. If there is a $100,000 mortgage and a $25,000 2nd mortgage but the house will only bring $115,000 - a short sale is possible. The
2nd mortgagee will need to be willing to accept less than the $25,000 payoff.
This can happen with a 1st mortgage as well. If the 1st mortgage is $100,000 but the house will only bring $90,000, the !st mortgagee may be willing to do a short sale. Here is the key - most all lenders will not negotiate a short sale after there has been a Sheriff Sale. If you must sell, make the arrangements to get the house on the market immediately. The longer you wait, the more difficult it may be to get the house sold and closed within the timeframe required by your lender.

What is a Sheriff Sale? This is a public auction, usually located on the steps of the county courthouse, where the bank auctions the property. By this time, don't expect the amount required at the sale to be anywhere close to where is was before you got behind. $100,000 can easily rise to $120,000. If the property is upsidedown, investors who attend the Sheriff Sale will not be interested. The bank will bid on the property, ultimately protecting their investment (or loss). With the bid, at the end of the auction, the bank will recieve what is called a Sheriff's Certificate of Sale. In South Dakota, after a 6 month redemption period, the bank will recieve the Sheriff's Deed.

Once the 6 month redemption period is up, if you have not moved out of the house you will be evicted. This is the 'end' that must be avoided.

When is the Sheriff Sale scheduled? One of the many legal documents you will recieve will tell when the sale has been scheduled. You can also check with the county where your property is located. In Minnehaha County, go to www.minnehahacounty.org. Click the Foreclosure link. There is a list of upcoming sales - usually a month or 2 out. In Lincoln County, go to www.lincolncountysd.org.

Can I sell my house during the redemption period? Yes.
Can I keep any equity I have in my house if I sell it during the redemption period? Yes. As long as the bank(s) has recovered 100% of the payoff balance including all interest, penalties and fees.
What is the redemption period exactly? The redemtopn period begins the day of the Sheriff Sale. You have 6 months from that date to 'redeem' yourself or to pay back everything you owe. In most cases, the only way this can be done is to sell the property. You can remain in the house during the redemption period. If the property is redeemed during the 6 month period, there is a fee payable to the sheriff office - in Minnehaha County that fee is approximately $1086.00.
Can the redemption period be accelerated? Yes. If you move out of the property and it is vacant, the bank can accelerate the redemption period (through the court) - sometimes to 2 months.
What if I am filing Bankruptcy? Talk with your attorney.
What is an IRS 1099? (We are not tax advisors so please consult with a CPA regarding this matter). As the result of a short sale, the bank will send a 1099 to the Internal Revenue Service showing 'additional income' which is actually the amount that you did not have to pay back to the bank. The IRS sees this as income of which you may have to pay income tax. See the link below.

Ultimately, is it worth going through all this to protect our home and/or our credit? That is up to you. We would advise NOT to give up. But people do. Please speak with a consumer credit counselor regarding any future credit ramifications resulting from foreclosure. Then you decide.

To highlight the most important points:
1. Talk with your bank.
2. Open and read all coorespondence from your bank and/or their legal representation.
3. Talk with a real estate attorney.
4. Call a REALTOR® if you think there is no way you will be able to keep your house.
5. Educate yourself.

Here are some important links. Please thoroughly explore each one.

Lutheran Social Services in Sioux Falls
HUD - Tips for Avoiding Foreclosure
Freddie Mac - Do's and Don'ts in Foreclosure
Freddie Mac - Avoiding foreclosure
IRS - Questions and Answers on Home Foreclosure
Federal Trade Commission - Foreclosure Rescue Scams

Please feel free to call with any real estate related questions or concerns. If we can't help you we will try to help you find someone who can.