Alternatives to Foreclosure

I can’t make my payments! What are my options?

I hear this all the time. Most of the time THE CAUSE of not being able to make your

payment is out of your control!

There are many reasons why you might miss payments and start to go into Foreclosure.

Someone may have put you into a bad loan without informing you how the loan works or you have had a hardship (Covid19, loss of job, health issues or death in the family, forced to move because of employment, divorce etc…) which caused you to not be able to keep up on the bills. Bad things happen to good people every day! I know because I see and talk to these good people all the time.

So, the big question is, WHAT OPTIONS do you have IF you can’t make your payments and you will be going into foreclosure if something doesn’t change.

Let’s look at these options one by one.

OPTION 1: Do Nothing

If a homeowner does nothing, they most likely will lose their home at foreclosure auction.
Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option!

OPTION 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 and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.

OPTION 3: Reinstatement

Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

OPTION 4: Loan Modification

Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender that you have fixed the problem that caused the late payment.

OPTION 5: Forbearance (Covid19 Programs)

Lender may be able to arrange a repayment plan based on the homeowner’s 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 are able to meet the new payment plan requirements.

OPTION 6: Partial Claim:

A loan from the lender for a 2nd loan to include back payments, costs and fees.

OPTION 7: Deed in Lieu of Foreclosure

Give the property back to the bank instead of the bank foreclosing. Banks generally require the home to be well maintained; all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.

OPTION 8: Bankruptcy

This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.

OPTION 9: Sale

If the property has equity (money left over after all loans and monetary encumbrances are paid), the homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.

Call us today and I’ll help you evaluate your situation for FREE and see which options you qualify for and which one will most benefit you and your family.