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.
- Chapter 7 (Liquidation) To completely settle personal debt.
- Chapter 13 (Wage Earner Plan) Payments are made towards a plan to pay off debts in
3-5 years.
- Chapter 11 (Business Reorganization) A business debt solution.
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.