by: Mike Ton
Know Your Options and Make The Best Decision!
We are providing this information so you can make the best decision for you, your family, and ultimately your future. Clearly understanding your options will allow you to move forward with confidence, knowing that you are doing everything you can for yourself in this challenging time.
It is advisable that you seek financial and legal advice from professionals as well, in order to help with a decision and a plan.
This is most likely the first time you’ve experienced an event like this, so make sure you take the time to learn your options. Realize that we will certainly do our best to help!
Below is a list of typical solutions available. The first option we cover is what is typically most beneficial to the homeowner.
1. Loan Modification: Many homeowners don’t think that a loan modification is an option for them. The last few months have brought HUGE changes for homeowners regarding loan modifications! In fact, Loan Modifications are the biggest trend right now with lenders. But BEWARE, because although the lender wants to give you a loan mod, they may not be looking after your best interests, they may be looking after their OWN best interests.
Statistics show that 80% of loan modifications done without an attorney result in the homeowner ending up back in default! Why is that? It’s because the lender does not take the homeowners situation (or best interests) into consideration when doing the loan mod. All they want is for the loan to be current again; they do not care about the homeowner long term or about future defaults. They are only thinking about the present.
Options other than a Loan Modification
2. Reinstating the loan: This is simply paying all of the back payments, late fees, attorney fees and any other fees that may be in place, and bringing your loan current. Simply call your lender (or foreclosing attorney) and ask for the reinstatement figure. Even if you have the funds available to reinstate your mortgage, it may not be your best course of action (especially if you have a high interest rate or an ARM). You may want to consider doing a loan modification instead of reinstating. A loan modification may not be available to you after your mortgage is current again! Yes, that’s right; your lender may do a loan modification for you if you are behind in your payments, but may not if you are current. We know, it’s crazy, but it is the truth. IF YOU ARE VERY NEAR A FORECLOSURE SALE DATE, AND YOU HAVE THE FUNDS TO REINSTATE, THEN IT MAY BE WISE FOR YOU TO DO SO!!!
3. Refinance: This is an option that used to exist and be a possibility. Since the downfall of the subprime mortgage industry it has become very difficult if not impossible to get refinanced if you have even 1 or 2 late payments. Be Cautious about getting tied up with someone who promises to get you refinanced. Make sure they do things in a timely matter, and choose another option if they don’t have it done within a specified time period (2-3 weeks!).
4. Forbearance: This is a program where your lender will take a down payment on the amount owed to them, and let you make payments on the remainder. It may require a substantial down payment – as much as half of the back payment amount up front and your monthly payment may go up significantly until everything is caught up. If you miss even one payment during this plan, the lender can go right back to foreclosing. Make sure you can handle the obligation!
5. Selling the Property: This can be a reasonable solution if you’re not able to handle the methods stated above. Selling the property and avoiding the foreclosure on your credit and the deficiency judgment is a suitable choice for many people. Be careful about simply listing your property with an agent and hoping for a sale. If your agent fails to do a good job selling, or if your buyer never appears, you could be in real trouble! What if your buyer’s financing falls through at the last minute?
Consider selling to an experienced investor. This can provide a “quick sale” that stops the foreclosure. An experienced investor can buy the property even if:
You have minimal equity: An investor can still buy your house by negotiating with your lender and doing what is called a “Short Sale”.
This is where the lender will agree to take a discount on the amount owed to them. This is an extremely advanced method that should only be trusted with an experienced investor who is trained in doing short sales. This is an ideal solution if you have minimal equity or if you don’t want to chance listing your property.
The foreclosure sale is very near: An experienced investor has the means to buy your property very quickly, or get the lender to postpone the sale until details can be finalized and closing can take place.
6. Deed In Lieu Of Foreclosure: This is simply giving the property back to your lender and walking away with nothing. Unfortunately, it has a very negative effect on your credit similar to having a full blown foreclosure. The lender can actually refuse the property back and still foreclose. It is advisable that you do your best to accomplish one of the options stated previously in this article. Deed in Lieu is like giving up, and can have a devastating effect on your credit.
7. Bankruptcy: Attorneys will sometimes advise a homeowner to file bankruptcy in order to avoid the foreclosure sale, telling them that this will solve their problem. Unfortunately, all bankruptcy does is temporarily postpone the sale. The lender can file for a release (relief of stay) and get around the bankruptcy, or you can fail to maintain the arrangement. If this happens, you will have a foreclosure AND a bankruptcy on your credit.
8. Do Nothing: Yes, we do see it. Unfortunately, homeowners will get so overwhelmed with the situation, that they simply do nothing. DO NOT fall into this category! You DO have options and if you take action, you can most likely get something done to help you with this situation.
We hope that this overview of options has been of benefit to you, and helped you to have a clear understanding of what to do next.
Please visit http://uslawfirmloanmod.com for more information.
—Important Disclaimer—
Although we have tried to provide accurate information within this article and on our website, you are encouraged to verify any statements by seeking additional legal and financial advice. Information is provided based on our own knowledge and experience, and recipient/reader of this or any information provided by us hereby holds harmless our company, members, managers, family members or anyone else associated with us for any damage that may occur directly or indirectly for actions taken by anyone reading this material. This material is meant for informational purposes only and is accurate to the best of publisher’s knowledge. Foreclosure is a serious matter and requires serious action. Get professional guidance immediately!
Information is not the same as legal advice!
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