What Are The Options of Homeowners In Foreclosure?

1. It can be rare but some homeowners can work out arrangements with the lender if their mortgage is in default.. You may be allowed to reinstate or make the loan current by paying a lump sum or making scheduled payments to your lender over a given amount of time. Most homeowners don't know their rights or the options to better their mortgage – foreclosure situation. Most homeowners deal with a collection mentality when communicating with the lender's representatives. The success rate with this option might be hard for most homeowners. A temporary fix is not always the best solution. You should always ask questions and seek qualified advice.

2. You can refinance your home. If there is lots of equity in your home and you're not to far behind on payments, this is a great option. Usually the lender would refinance the existing loan and include as part of the new loan any late payments, and fees that you would need to regain control. It would all be "wrapped" into one mortgage. The challenge that most homeowners have is they have leveraged their home to the max. Therefore, very little equity is in the home especially when you add on back payments and fees so it becomes very difficult to "Refinance". Bad credit is also an issue with new mortgages.

3. You can list your home with a Realtor. If you have equity in the property this can be a great option. However, if you have very little equity, it is very hard to sell homes with real estate agents. The reason why is because you have to pay a Realtor fee or commission if they list your house. Typically it's 4-6% of the purchase price. Then what happens is they increase the purchase price of the the home to compensate for the commission and now it becomes practically impossible to sell your home when it's at or over market value in such a short time. Plus, buyers cannot qualify for loans if the home is selling for more than what it's worth. You would be better off to try to sell it yourself. Selling your home is not always easy and you may be “upside down in value even when selling it yourself. Remember if you are planning on renting & most apartments have a credit check and finding comparable housing to meet your standards might be hard.

4. You can sell the house yourself. All you need to do is put a "FOR SALE" sign in your front yard. If you go this route, you should tell everyone you are selling your home, maybe they know a friend or relative who is looking to buy in the neighborhood. Selling your home is not always easy and you mat be “upside down in value. Remember if you are planning on renting & most apartments have a credit check and finding comparable housing to meet your standards might be hard.

5. You can give the property back to the lender. If there are no other liens on the title, the lender may agree to take the property back. This process of transferring ownership from you to the lender under these circumstances is called a Deed in Lieu of Foreclosure, and is sometimes referred to as a "friendly foreclosure" because in essence that what it is. You walk away. A deed in lieu of foreclosure "Does" not protect your credit, nor will it cut off the rights of junior lien holders. This will avoid the possibility of a deficiency judgment in the event the property fails to produce enough to cover the outstanding debts after it goes to auction. So if you have equity in the property this is "Not" a good option. You will give up all rights to receive any surplus from the auction.

Loss Mitigation Can Stop The Foreclosure Process!

6. What is a Short Sale?

What this does is allow someone to buy your home under market value so you can avoid the foreclosure auction. This method should be a last resort!

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excessive inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a substantial loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.


7. You can file bankruptcy. It is very important you understand how bankruptcy works. There are several different "chapters" of bankruptcy. Some are work-out others are wipe-out, but here is the general idea. When someone files bankruptcy it's almost like someone builds a "bullet-proof" barrier around the house. No one can touch you! However, you are not free of all responsibility and most people do not understand that. We are not a bankruptcy attorney, but you need to know the difference between a Chapter 7 and Chapter 13 bankruptcy so you know what happens. {Note: Bankruptcy should be the last alternative or option and should not be used to stop foreclosure unless you have no other option or else you need protection of a bankruptcy due to other circumstances or situations you are currently up against. If you feel this may be your best option, please seek legal advise from a competent professional in the field}. Ask lots of questions especially about the trust and garnishments. You don't want to be set up for failure and many homes in bankruptcy still go through foreclosure.

8. And finally, you can just let it go to foreclosure. Basically you don't do anything. Typically you will be evicted after about 2-3 weeks after the sale date. You leave with nothing in hand and a foreclosure on your credit report. This is without question the worst option of all. Don't let anyone convince you to just give up and do nothing. At least try something. You have nothing to lose. It could mean the difference between a few thousand dollars in your pocket compared to nothing and a foreclosure on your credit. Remember the alternatives issues rent vs bad credit, living with your relatives, the cost and burden of moving, etc.

Warning!:

Once the foreclosure process is filed with the court system, it will be on record and available for public knowledge. Realtors, short sale home investors, companies that offer to buy your home and sell it to you for an increased rate, and others will be contacting you. In most cases it is to the homeowners best advantage to keep their homes.

What is Loss Mitigation?

Loss mitigation is the process of trying to stop a home foreclosure before it occurs. The loss mitigation process can be led by either an employee or representative of the lien holder and a third party that works strictly for the best interests of the home owner ( *Nations Trust Mitigation Services ). The loss mitigation process is often better handled by a third party due to their experience and the ability to deal with lending company without a personal attachment to the situation.

Loss Mitigation is not new and was introduced as a collaborative effort between the federal government and the mortgage industry. The program was established to help home owners that were facing the loss of their homes due to delinquent payments. A professional loss mitigation counselor will work with the home owner as well as the lender to find an alternative to foreclosure.

There are several options when it comes to loss mitigation and the main focus should be to keep the home owner in the home. A loss mitigation counselor should first seek to set up a loan modification plan or a repayment plan that is realistic for the home owner as well as agreeable to the lending institution. Loan modification may include a partial payment of amounts in arrears and then an extension of the loan terms to compensate for the remainder of the amount of the loan in default. With the repayment plan, it is imperative that the plan be realistic when it comes to the home owners ability to repay the amount that is delinquent.

Loss mitigation is about keeping the home owner in their home. If that does not seem like a realistic outcome, every attempt should be made to help the home owner get the most for their home as they possibly can before a foreclosure sale takes place. This may include deed-in-lieu or a short payoff if a qualified purchaser can be found. ( Again as a last resort )

By taking the time to know what your rights are in the foreclosure process. It is possible to use the loss mitigation process to get back on track with your mortgage. Lenders ultimately want to keep the home owner in their home and it is up to the home owner to show that they will be able to catch up or maintain the mortgage payment in the future.

Something similar to reinstating the loan is called a Forbearance Agreement. This is when we actually negotiate a "deal" with your lender. We will work with your lender to add on the amount owed in back payments to the back of the loan. You can even ask if the bank would be willing to take a smaller portion upfront and add the rest to the back of the loan. Another option is to ask to pay some upfront and forgive the rest or ad it to the back of the loan. We will explore all options that you qualify for.

The nice thing is the fee is normally paid at the “close” from funds set aside from the lender. Meaning you don't have to come up with additional fees other then the funds you would ave to post for the lender anyway. There is a modest filling charge when your case file is submitted. The pre-Approval (FSR) form is free as with your consultation. Once approved there is a 98% success rate so long as the homeowner follows instructions.

The Loss Mitigation Process is not credit driven so bad credit is not an issue. We look at residual income ( Income VS Debt. ) The Loss Mitigation Process works with your existing loan situation, not a new loan. Through this process the negotiations and other work is done for you. Loss mitigation is a very effective service for those who choose to keep their homes.

Please contact your Loss Mitigation Case Counselor For Additional Information or to answer any questions. Ask for your Free “Pre-Qualification and Free Consultation. You don't spend a dime until we know you pre-qualify. You may also request a Free Home Budget Kit (Budget Form & Budget Tips). Your Loss Mitigation Case Counselor will walk your through all the paper work and guide you though your requirements every step of the way. Once you start the Loss Mitigation Process it is important to complete and send all forms, send all required supporting documents, and start making timely payments into the third party trust. The third party trust has a few functions, most importantly no parties get a cent until the close. It also shows payment history.

Save Your Home From Foreclosure!