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.Payoff Request
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.
Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
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 you have fixed the problem that caused the late payment.
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.
A loan from the lender for a 2nd loan to include back payments, costs, and fees.
Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and
taxes must be current. Most loan applications ask if this has ever happened.
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 toward a plan to pay off debts in 3-5 years.
-Chapter 11 (Business Reorganization) A business debt solution.
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. This is what we specialize in!
The term “Short Sale” is used in the real estate world to describe when there is more debt owing against the property than the actual property is worth. The owner can’t sell or refinance the property unless the mortgage or lien holders agree to accept a payment that is less-or-SHORT-of the amount the owner actually owes. A short sale is when a borrower who is underwater on their property has no other way but to short the lender(s) the payoffs in order sell the property.
The answer is simple. Borrowers do a short sale to avoid having a foreclosure, which can be very damaging on one’s credit. A short sale is also another way for borrowers to understand the outcome of the situation and to lessen the amount of late payments in a lengthy stressful foreclosure process.
Find out your options and get advice on foreclosure alternatives, loan modifications, government mortgage relief, short sales, forbearance, deed-in-lieu and more… StopForeclosureInfo.org is provided by Realty One Group Inc. in collaboration with HUD approved Housing Counseling Agencies.