What are your Options if you are Facing Foreclosure?

July 29, 2010 - PRLog -- What are your options in a foreclosure?
If you are a homeowner in foreclosure, what options do you have? There are actually several different ways you can approach a foreclosure depending on how proactive you want to be and what resources you have available to you. This article contains some options for what you can do in the event of being in foreclosure.
Re-instatement of the Loan:  This is also called Curing the Loan or Bringing the Loan Current.  This occurs by paying the lender everything that is owed in one lump sum – including all missed payments, any late fees, any fees the lender incurred for foreclosure filings, and legal fees.  If you suddenly come up with a lump sum of money, this can be a good solution.  However, most homeowners in pre-foreclosure do not have access to lump sums of cash.  So, one out-of-the-box method to do this can involve selling the property to an investor “subject to” the existing loans, and the investor will make the payment to bring the loans current.  As with everything, there is a risk to this solution.  The lender may accelerate the loan (ie. require it to be paid in full immediately) because of the due-on-sale clause, but at this time that is a rare occurrence – the banks don’t want to take a house if the payments are being made.
Repayment Plan: This is an arrangement between the bank and the homeowner for the homeowner to gradually catch up on missed (delinquent) payments. These agreements should be in writing to protect the homeowner and require higher payments than the usual monthly amount.  These higher amounts are paid for a specified period of time until the loan is brought up-to-date, and then the payments return to the original lower amount.
Loan Modification: A loan modification involves changing the terms of a mortgage. Modifications can be used to reduce the interest rate on the mortgage, extend the term of the mortgage (eg. make it 30 years instead of 15 years), change the type of mortgage (eg. make an adjustable rate into a fixed rate) or even add the delinquent payments to the total mortgage balance. Loan modifications are not easily granted and there is a lengthy and convoluted process to apply and obtain one.
Forbearance Agreement: This is a formal, written arrangement between the bank and the homeowner that allows the homeowner to make very low payments for a short period of time.  Usually this time period is limited to 6 months maximum.  Also, it is sometimes possible to have no payments due at all during the Forbearance.  However, after the forbearance term, the payments increase to a level higher than the original monthly mortgage payments until the loan is up-to-date.  At that point, the payments return to normal.
Deed-in-Lieu: A Deed in Lieu is when a homeowner voluntarily gives back the property in exchange for a release from all obligations under the mortgage. A DIL may not be accepted from borrowers who can financially make their payments. And if there’s more than one lien on the property, a DIL cannot be done.  However, if a borrower qualifies for a DIL program they may also be eligible for cash from the lender using the “Cash for Keys” program.
Full Payoff Sale: The borrower sells the property and pays off the loan.  The challenge, of course, is being able to sell it quickly enough; and for many people this is simply not an option as they owe more than they can sell for.
Refinance: The borrower may be able to refinance and get a new loan, but generally this is difficult because the borrower has little equity and poor credit. Furthermore, even if they can get a new loan, it will probably have higher payments than the old loan due to the borrower’s now-damaged credit and a high loan-to-value ratio.
Do Nothing / Foreclosure: This is the worst choice for the homeowner.  Yes, they may be able to stay in the house for several months for nothing, but their credit will be ruined, they will be evicted when the lender takes the house back, and they face the prospect of a large deficiency judgment hitting them several months in the future.
Short Sale: The homeowner or their agent or buyer negotiates with the lender to sell the property for less than is actually owed. This generally results in no cash to the homeowner but will be much, much better for the credit than a completed foreclosure.  Also, any deficiency judgment can be negotiated down or even fully removed.  We are short sale professionals and can provide you with more information at http://www.StopForeclosureWithDave.com .

Each one of these options is viable depending on your situation and how far along you are in the foreclosure process. You do not have to lose your house to the bank and suffer from a foreclosure as you have many different options to prevent that from happening. By stopping your foreclosure you can save your credit, remove a deficiency judgment, and avoid the continued pain and suffering that will occur for many years after the foreclosure.


If you haven’t visited our website and are in need of foreclosure help, we are here to help you.  http://www.StopForeclosureWithDave.com
You can get a Free Report that further explains some of the options above on the Fastest Ways to Stop Foreclosure at http://www.StopForeclosureWithDave.com

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We buy houses in Virginia Beach, Norfolk, Chesapeake, Portsmouth -- the Tidewater or Hampton Roads area of Virginia. We stop foreclosure via short sale and help the distressed home owner sell quickly to avoid foreclosure and deficiency judgment.