It’s sad to see that many homeowners are just walking away from the house, not knowing that they do have options to save from foreclosure. When they get into financial trouble, they stop answering the phone from lenders, stop checking the mails and sometimes couples don’t even discuss the financial difficulties with each other, one or the other comes to know when they get the trustee sale notice or after the auction.
I know sometimes these families try their best to avoid foreclosure but cannot avoid it due to some other circumstances. But, at least they can say that they tried and didn’t run from the problems!!
When you think you cannot afford the mortgage payment or having difficulty in payment the amount, contact the lender for the help in the beginning stage itself so that you have enough time to fix the problem. There are several options depend on your financial situation to save your house from foreclosure.
Here are the specific options homeowners have:
Forbearance
– Forbearance means when the lenders allows a borrower to pay less than the full amount of the mortgage or skip a few payments for a short period of time. This is for borrowers who are having temporary financial problems and will be better after sometime. You also need to show that this hardship is temporary and also show a reasonable plan to bring the loan current. You need to contact your lender and ask for their requirement for Forbearance agreement. Before going through this option, you have to really check your current financial numbers and if you think that you can afford the payments then go with this option.
Reinstatement
- A homeowner may be able to make a payment that covers all of the previous late payments, usually at the end of a forbearance period. If you haven’t contacted the lender and the lender started the legal proceeding for trustee sale, lender may stop the foreclosure if you are able to pay all the legal fees and make your loan current.
Repayment Plan
- Lenders may allow a borrower who has fallen behind to make additional payments each month along with your current payment until the past due amount has been paid. If you had hardship temporarily in the past but now you are back on the feet then ask your lender for repayment plan.
Loan Modification
- Loan modification means lender changes to your current loan agreement by either reducing interest rate, or increase the repayment period or lower the principal amount so that your payments can be more affordable to you. These changes may be permanent or temporary. You can call the bank directly for loan modification or contact the HUD counselors for help to assist you for loan modification. There are other companies out there who does loan modification but need to careful when you talk to those loan modification companies, there are lot of scammers out there who just gets your money and disappears. It takes months to know what kind of loan modification you are getting from lenders but this is one of the options to keep your home.
Deed In Lieu
- A homeowner could be allowed to voluntarily sign over the property to the lender in exchange for debt forgiveness. Homeowners needs to prove that there’s a financial hardship and cannot afford to keep the house. This is usually the last option to avoid the foreclosure when no other options work out. Most of the lenders do not accept a deed-in-lieu, the lender usually requires the homeowner to list the property and try to sell for certain months and if they are unsuccessful in selling their house, they can request for deed-in-lieu. This option can damage your credit but one that is better than having credit history of foreclosure.
Short Sale
– A short sale is when the lender agrees to accept less for the property than is actually owed on the property. If you cannot afford the payments due to financial hardship and wants to avoid foreclosure then short sale may be the options for you. This will also affect your credit but not as foreclosure. In this option, you have to work with a realtor, who is trained and experienced in short sales who know how to negotiate with lenders and successfully sell your house. If you are doing a successful short sale, then you can build your credit fast and can qualify for another loan in 2 years.
So, above are the options to save from foreclosure. Consult with CPA or attorney for any tax related and other legal questions. My advice for you is to take some action when you know that you will be in trouble, seek professional advice early enough to resolve your issues.
Image: FreeDigitalPhotos.net
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