Foreclosure Options

Don’t lose hope. You have several options.

Keeping your home:

Mortgage Modification – Your lender may consider a mortgage modification because they do not want to own real estate. Otherwise if they foreclose they have to pay the taxes, insurance, utilities, maintenance, Realtors, attorneys until it is sold. You can call your mortgage company to discuss the possibility of reducing your monthly payment to something more affordable for you.
Forbearance or Re-payment plan – If you are behind in your mortgage payments you can contact your lender to discuss a repayment plan including late fees and court costs. Instead of one lump sum a forbearance is paid in smaller payments over time
Refinance – If the current mortgage rates are lower than your present rate and if your credit allows, you may be able to refinance to a lower interest rate and reduce your monthly payment.
Re-instatement – You have the right to catch up all the payments in arrears, late fees and court costs and stop foreclosure as long as you do so before the day property is sold at the court house.
Short Refi or Government’s HOPE Program – Some lenders may consider refinancing your home with a reduction in the principal balance and possibly the interest rate as well.
Rent – You may be able to rent the home. As long as the rent payment covers your mortgage and home owner association fees you may be albe to keep the home until the market allow you to sell it. The problem is, plenty of rental properties are available. So covering all your costs may be difficult. There are other risks to renting. Your Realtor can help you understand the these risks and show you what homes like yours are currently renting for.
Service Members Civil Relief Act (SCRA) – This law provides certain protection to military personnel. www.servicemembers.gov/scratext.htm

Not keeping your home:

Sell – If you have equity in the property it’s better to sell the home than lose it to foreclosure. Foreclosure will damage your credit and your financial future. Your Realtor can help you determine fair market value for your home and calculate your estimated net proceeds after the sale. Contact your mortgage company to get the payoff for all of your mortgages before this meeting so the calculations are accurate.
Deed in Lieu of Foreclosure – This is known as a friendly foreclosure. In this case the homeowner gives the deed back to the mortgage company in an effort to prevent a deficiency judgment. You must only have one mortgage and either small or no liens on the property. This will still be recorded as a foreclosure and have the same negative consequences on your credit report.
Bankruptcy – This requires an attorney to file chapters, 7, 11 or 13 on your behalf. Bankruptcy delays foreclosure but your credit still reflects both the bankruptcy and the foreclosure.
Short Sale – This is one of the most widely used method to hold off a foreclosure. With the current financial crisis, mortgage companies and banks are welcoming short sales and have created entire divisions to process them. However, the Short Sale process takes time, patience, good communication skills, organization and professionalism. Short Sales done correctly will create a win-win for everyone. A Realtor with the Certified Distressed Property Expert (CDPE) designation is best equipped to guide you. There are many benefits to a Short Sale. If your agent is a Certified Distressed Property Expert (CDPE) ask them how this option would work for you. If they are not a CDPE contact The Ramsey Group to learn all about how best to evaluate the short sale option. At The Ramsey Group we have trained and earned the CDPE designation.