Options Other Than Foreclosure

Reinstatement

• Possible if reason for distress was temporary and has been resolved
• Possible if you are able to pay all the payments and late fees due
• May be done up to the day of the bank sale
• Mortgage will remain the same

Forebearance or Re-payment Plant

• Possible if reason for distress was temporary and has been resolved
• Requires lender approvalMay allow you to make your back payments over time
• The Catch: Does not fully reinstate your mortgage until payments are made in full without missing one payment.

Sell the Property

• Possible if you have equity
• You may have more time to sell the property after receiving a foreclosure notice

Rent the Property

• Possible if you can rent the property for the mortgage amount or more
• Expenses (Insurance, taxes, and repairs) must be covered by the rent

Refinance

• Possible if you have enough equity and a strong credit score
• Typically a short-term solution since payments may go up

Mortgage Modification

• Possible if you can qualify with financial information
  • You must have a verifiable means of income
  • You must be able to afford the modified payment
• Requires lender cooperation
• Modifies loan and often reduces payments
• You may pursue a mortification and prepare for a short sale simultaneously
• Click here for more information

Deed-In-Lieu of Foreclosure (“Friendly” Foreclosure)

• Deed is signed over to the bank rather than going through foreclosure process
• May still be reported as a foreclosureTypically works with one mortgage only

Forebearance or Re-payment Plant

• Stalls a foreclosure
• May save property if payments are lower to where the property can be afforded
• Property is difficult to sell once you are in this processRequires trustee cooperation
• Only stalls a foreclosure without eliminating the mortgage.

Servicemembers Civil Relief Act (SCRA)

• Provides temporary relief to military personnel
• Possible if you can show that mortgage was entered into prior to beginning active duty
• Must still be owned by military member
• Must show service materially affects your ability to pay.

Short Sale

• Possible only if homeowner can show financial hardship, monthly shortfall, and does not have significant assets to help pay down the mortgage
  • Borrower owes an amount on property that when combined with closing costs and commission, is higher than current market value.
  • A negotiation is entered into with mortgage company to accept less than the full balance of the loan at closing.
• Two major consequences are
  • The cancellation of Debt Tax Liability (Mortgage Forgiveness Debt Relief Act of 2007)
  • Deficiency Judgment
• The Short Sale Process
  • Complete or provide all necessary documentation
  • Keep property presentable and ready to sellBe available to communicate with the mortgage company