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Eight of the Most Common Foreclosure Options

Following are the most common options for people facing foreclosure. Depending on your situation, all of these options may, or may not, be available to you. Everyone’s individual situation is different. Call us and we can discuss your options.

 

  1. REINSTATE THE LOAN – The most obvious option is to pay the loan current. If foreclosure proceedings have already been filed then the amount needed to get the loan current will not only include back payments, but also late charges and possibly attorney fees. This is the quickest and the most efficient way of ending a foreclosure action.
     
  2. FORBEARANCE – The lender stops or postpones legal action. Usually granted when you make satisfactory arrangements to bring the overdue mortgage payments current.
     
  3. LOAN MODIFICATION – A loan modification seeks to avoid foreclosure by negotiating with the lender to modify the terms of the loan. Loan modifications may include adjusting the interest rate, extending the loan period, or adding the delinquent portion and fees back onto the principal of the loan to be repaid over time.
     
  4. MORTGAGE REFINANCING – In most cases, once foreclosure has started, you have been through several months of late payments or no payments. These late payments have a devastating effect on your credit rating. In addition, the new mortgage company will easily find out about the current foreclosure action. This most often leads to a denial of the refinance loan application. If you are approved you can bet it will be at a VERY high interest rate with higher than normal closing costs etc.

    This option is normally only for those with excellent credit histories and who have only suffered a temporary setback. If you are seriously considering this option then call us. We have connections with the companies that are most likely to be able to help you. Remember that time is of the essence so don’t waste a lot of valuable time on this option. You could lose your home while waiting on loan approval.
     
  5. SALE OF THE PROPERTY – if you have been unable to work with your lender, or find another suitable solution in a TIMELY MANNER, it is time to seriously consider selling.

    When time is of the essence you should consider selling your property to an investor who offers “a quick closing.” Typically, this will be for less than fair market value, but can be a benefit to you because it is a quick “as is” sale with no real estate commissions. “As is” means you would not have to spend any money doing repairs, or spend time putting the house in perfect condition. By selling your house “as is” to an investor, you get a quick sale - allowing you to instantly stop the foreclosure and salvage your credit.
     
  6. DEED IN LIEU OF FORECLOSURE – is when you voluntary deed title to your property to the lender. You basically give the house back to the bank. The ordinary effect of the taking of a Deed in Lieu is to extinguish the lender's deed of trust and vest the lender with title subject to all other existing liens and encumbrances. In effect, the lender becomes the new owner. The lender is not required to accept the Deed in Lieu and can show his/her refusal by filing a Notice of Non Acceptance with the County Recorder.
     
  7. BANKRUPTCY – Some homeowners act on their lawyer's advice and file bankruptcy thinking that all their problems are now solved. Bankruptcy does put a hold on everything, yes, but all it buys you is a little time. The end result is almost always the property still goes to auction and you now have a bankruptcy in addition to the foreclosure on your credit report.
     
  8. NOTHING – You may find it odd that Nothing is listed as an option, however one of the most common options taken by homeowners is NOTHING. Don’t fall into the trap of thinking that everything will magically work itself out, because it will not.
     

You are likely confused by your options and fearful of making a bad decision, but by doing nothing you are making a decision. The decision you are making by doing nothing is the decision to turn a blind eye to reality while losing your home.
 

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630-857-6457