Your Options When Facing Foreclosure

1. Forbearance
A special forebearance is a written repayment agreement between a mortgagee and a mortgagor, which contains a plan to reinstate an asset that is at least three mortgage payments behind.

Often times, the bank will postpone foreclosure in exchange for partial payment of defaulted arrears. The remaining portion is then added to the back of the mortgage balance and your payments is brought current. Your monthly payments however, remain the same.

This will work for you only if you are able to continue with your current monthly mortgage payments...otherwise, the property will be right back into foreclosure.

2. Loan Modification
This is a permanent change in one or more of the terms of a mortgagor's loan, allowing the loan to be reinstated, and resulting in a payment that the mortgagor can afford.

To qualify, you must prove that you have a steady source of income, is experiencing hardship, and is unable to keep up with the current monthly mortgage payments.

If you think that this is for you, then you need to contact your bank and to start the negotiation process. The earlier, the better. Do you need a lawyer? Not really! But if you think that you cannot handle the process, then your best bet is to get one.

If successful, the bank will put you on a 3-month modified mortgage payment trial period. If you default, the property will be right back into foreclosure, if you succeed, then the loan will be permantly modified for the agreed upon period.

During payment period, the property will go right back into foreclosure, if you fail to make the agree upon payments.

3. Bankruptcy
Chapter 13 - The bankruptcy reform Act of October 2005, allows a repayment plan over 5 years. some debts will be discounted. The bankruptcy trustee sets up the repayment plan. You then make payments to the trustee, who in-turn pay your creditors. This will definitely buy you some time, but it will NOT stop the foreclosure!

Chapter 7 - This is a total liquidation of all your assets. You are no longer responsible for your debts. Your creditors cannot pursue you for repayment. Your home is usually included in the liquidation. The lender will still have to foreclose to repossess the house. In this case, you should sell the house to eliminate foreclosure and deficiency judgements.

Banks hate bankruptcy! To them it is a slap in the face from a rebellious homeowner. It stalls the foreclosure process and cost them lots of money. Eighty percent (80%) of homeowners who file bankruptcy will lose their homes, unless of course, you know what to do.

Even in bankruptcy, you are still required to keep up with a payment plan.

Once you default, the bank simply file a relief of stay, get permission from the courts to continue foreclosure, and sell the house from under you.

To succeed, you need a saavy lawyer who has your best interest at heart. Unfortunately, this is often not the case.

4. Sell
If a homeowner has equity in the property, you can and should sell the property. You will receive a check at closing for the equity over and above what is owed plus closing cost. Selling options include listing with a realtor or seling via for-sale-by-owner (FSBO).

This takes forever! You have to find a buyer, qualify them for a loan, do appraisal, inspection, etc... By the time it comes to closing, the bank already sold the house.

When you are in foreclosure, you don't have time to sell your home the traditional way. But if you choose to list, make sure you have an escape clause that will allow you to sell it to the first person with whom you can work out a deal.

The bottom line? Avoid foreclosure at all cost.

5. Pre-Foreclosure Sale (Shortsale)
The pre-foreclosure sale program allows you to sell your home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed.

This is hot an fast! It is the quickest surest way to get rid of your property even if you are days away from the foreclosure. Saavy investors who understand the process, can help you with this one. The bottom line is the bank will agree to take less for the home as full payment.

The investor will to do the negotiating on your behalf and buy the property if the price is right. You don't have to do anything but provide the information that the bank requires.

You will be free to move on with your life and start afresh.

6. Deed In Leiu of Foreclosure (DIL)
This is a disposition option in which a mortgagor voluntarily deed collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments. Foreclosure will most likely be reported on your credit...also known as "voluntary foreclosure."

7. Loan Assumption
Some FHA-Insured mortgages are assumable...meaning the responsibility of payment can be taken over by another person via simple loan assumption or creditworthiness assumption. Loans made after 1986 does not qualify for this program.

8. Partial Claim
Under the partial claim option, a mortgagee will advance funds on behalf of the mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months principal, interest, taxes, and insurance). The mortgagor will execute a promissory note payable to HUD and subordinate mortgage. Currently these promissory or "partial claim" notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property.

9. Give up and allow the Home to go into Foreclosure
Wrong move! Foreclosure will sit on your credit for years to come and hold you hostage. You will not be able to qualify for a home for years to come. You will be forced to either live with relatives, pay rent, or if your situation worsen, live on the streets.

Foreclosure should only be considered as a last resort and should not be initiated until all relief options are exhausted. Do not allow this to happen to you! Avoid foreclosure at all cost. You will be glad you did!

How can we help?
We are Shortsales experts. we will negotiate with the bank your behalf. When we get the right price, we WILL BUY your home. Even if you are days away from the sherrif sale.

So, don't wait! If this is the option for you, submit your information to us immediately. So that we can start working on your behalf.

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