Robyn Yates
Broker/Owner, Leader
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FORECLOSURE ALTERNATIVES
You may be facing foreclosure, so what are your options? Try to look at the situation more from a financial standpoint rather than an emotional standpoint. This way you can more successfully analyze which option might best suit your needs and desires to move you toward evolving your financial difficulty. One very important thing to remember: Time is of the essence! It's time to think through your situation and make a decision. Then take action right away so you have enough time to complete the solution you choose.
NINE OPTIONS WHEN FACING FORECLOSURE:
1) Do Nothing - If a homeowner does nothing, they most likely will lose their home to foreclosure auction. Credit reports disclose the damaging information. Loan applications generally ask if the applicants ever been foreclosed upon.
2) Payoff/Refinance - Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is normally at a higher interest rate the may be a prepayment penalty. With this option, there should be equity in the home.
3) Reinstatement - Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
4) Loan Modification - Utilizing the existing mortgage company to refinance the debt or extend or modify the terms of the loan. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
5) Forbearance/Mediation - The lender may be able to arrange a repayment plan based on the homeowners financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you re able to meet the new payment loan requirements.
6) Partial Claim - A loan from the lender for a 2nd loan to include back payments costs and fees.
7) Deed in Lieu of Foreclosure - Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payments and taxes must be current. Banks must approve this option. Most loan applications ask if this has ever happened.
8) Bankruptcy - This option can liquidate debt and/or allow more time. Speak with a qualified Bankruptcy attorney.
Chapter 7: (Liquidation) To completely settle personal debt.
Chapter 13: (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-years.
Chapter 11: (business Re-Organization) A business debt solution.
9) Sale: If the property has equity (money left over after all the loans and monetary encumbrances are paid), the homeowner may sell the home without lender approval through a conventional home.
10) Short Sale - Also known as a pre-foreclosure sale, a short ale can be negotiated with your lender by a Real Estate Professional if what is owed is more than the property's value. The lender can agree to accept less than what is owed on the property as pay-off of the loan obligation.
