Foreclosure Solutions
The following options are the most common for those facing foreclosure. Depending on your situation all of the following options may, or may not, be available to you.
Call us at 505-681-4663 so we may answer your questions or give you further detailed information on these options.
Foreclosure Options:
Reinstate the Loan
The most efficient and most obvious way to stop foreclosure action is to bring the loan current. If foreclosure proceedings have already begun, the amount needed to pay the loan current will include back payments, late charges and the lender's Attorney fees.
Forbearance
If a borrower is behind on payments but gains the ability to make payments once again, the lender may allow the borrower to reinstate the delinquent loan through the payment of a lump sum, or a schedule of payments over a period of time. If a satisfactory arrangement has been made to bring the overdue payments current, the lender will stop or postpone the legal action.
Loan Modification
A modification can stop the foreclosure proceedings by negotiating with the lender to modify the terms of the original loan. This includes decreasing the interest rate, extending the term of the loan, adding the delinquent amount and fees back into the principal of the loan to be repaid over time, or other options at the lender's discretion to assist the borrower through a temporary setback. A lender will consider this option when foreclosure is eminent and the borrower's income has been decreased or unable to make mortgage payments, but will be able to keep the loan current after the loan modification.
Mortgage Refinancing
This is an option where the existing lender, or new lender, would allow the borrower to refinance the existing mortgage, wrap in any late payments and fees, and sometimes cash out part of the equity in the home to allow the borrower to regain control of a debilitating financial situation. However, once foreclosure has started or there are several months of late or no payments, credit ratings will be damaged. This could lead to a denial of the refinance, or if the loan is approved, it will be at a very high interest rate and higher than normal closing costs. Therefore, refinance is generally available to those who face a temporary financial setback, have shown outstanding credit history in the past, and can prove that the new mortgage payment can be supported.
Second Mortgage or Line of Credit
The existing lender, or a new lender, may offer a second loan in order to make any back payments, late fees, and other charges necessary to reinstate the loan. The borrower is required to make an additional mortgage payment to cover the principle and interest on the second loan. Once again, if foreclosure proceedings have begun or there have been several months of late or no payments, credit ratings will be impaired. If the second loan is approved, the payment may have a very high interest rate. Also, if the borrower cannot make payments on the first loan, how could they take on an additional payment to cover the second loan?
Deed-in-Lieu of Foreclosure (DIL)
This is a voluntary conveyance of title to the lender. When the borrower deeds the property back to the lender- basically giving the house back to the bank- the borrower is often released of any personal responsibility for the mortgage. In effect, the lender becomes the new owner. However, the lender is not required to accept the DIL. The lender will only consider this option if there are no other mortgages or liens on the property. The borrower must also prove their financial hardship.
Bankruptcy Filing
It is a myth that if Bankruptcy is filed all financial problems will be solved, and the borrower will be able to keep their home. Yes- bankruptcy can put a hold on everything- but all it buys is time. In almost all cases, the property still goes to auction and the borrower will now have a "Bankruptcy" in addition to a "Foreclosure" on a credit report- which will have serious financial implications for the next 10 years! Many creditors will not deal with someone who has a poor credit rating. Not only that, but now the borrower needs to find another place to live. After a bankruptcy and foreclosure, getting a landlord to accept you as a tenant is a nearly impossible task.
Sale of the Property
If the owner has been unable to work with the lenders in a timely manner, it is time to get serious about selling. However, if owners find that they cannot get help from their lender, or a new buyer cannot qualify for a new loan quickly, there might not be enough time before the foreclosure auction to "conventionally" sell the house with a Realtor. Refer to Low or No Equity for more information related to selling your home through a Realtor/Real Estate Agent.
When time is of the essence, the best option is to consider selling your property to an investor who offers a "quick closing". Typically this will sell for less than market value, but it can be a benefit because it is a quick sale with no real estate commissions to pay, and the owner does not have to pay out money to repair the home it is bought "as is." Selling your house to an investor in "as-is" condition stops the foreclosure and allows the owner to salvage his or her credit. See how We can Stop Foreclosure below and Sell a House for more information.
Short Sale
In certain cases, The lender may allow the borrower to sell the home when the proceeds from the sale are not sufficient to pay off the existing loan. This is known as a short sale. In some cases the borrower may have to pay taxes on any loss the lender writes off from the short sale. Contact a tax consultant for more information on any short sale tax that may be involved.
See below for information on how We can Stop Foreclosure and see Foreclosure Help.
We can Stop Foreclosure!
We are Real Estate Professionals that are associated with a group of investors that will stop foreclosure by buying your house quickly in "as is" condition. We also specialize in Short Sales- we will call your lender to stop the foreclosure proceedings, if we can negotiate an acceptable agreement.
Purchasing your house "as is" or executing a short sale will stop the foreclosure, pay off the loan, and salvage your credit. In many cases, we give you cash so you can move on with your life and put this financial burden behind you. See Sell a House and Foreclosure Help for more information.
Or call us at 505-681-4663!
! Legal Information is not the same as Legal Advice !
Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult an attorney if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.