Just as there are many reasons that have lead to the recent foreclosure crisis, homeowners have just as many options to help avoid foreclosure. However, to fully explain each and every option on this one page is impossible. So to avoid writing an article the size of a dictionary, we are going to cover only the most common and conventional methods of avoiding foreclosure.
As we begin to cover the many options available to home owners, the best and most effective is to work with the current lender. In our experience, we have found that most lenders would rather work with the borrowers than to continue the foreclosure process. The majority of lenders have at least two options available to the borrowers.
Forbearance is an agreement between the lender and the borrower that reinstates the delinquent loan because the homeowner will put up an initial lump sum of the total delinquency and pay the rest over a period of time. Entering into forbearance will temporarily increase the monthly payments to account for the reaming balance of the delinquency.
Loan Modification: This option is often compared to forbearance but it is important to understand that it is very different. A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Usually all or a portion of the arrearage (principle, interest, taxes and insurance) may be added to the mortgage balance. Foreclosure costs, late fees and other administrative expenses may not.
Check with your mortgage company to see if they will allow one of these two options in your situation. The homeowner can negotiate with the lender directly or they can acquire the assistance of a foreclosure specialist to negotiate with your lender on your behalf.
Work with a New Lender: When work outs with the current lender reach a deadlock, the next best option is to work with a new lender. If you have equity in your home you may be able to get a loan with more affordable payments. Contact your mortgage company to determine if a new loan is feasible. A true mortgage professional can determine this by evaluating your complete situation. Remember, you need to be working with a trusted mortgage professional or foreclosure specialist, not just anyone. You do not have the luxury to shop for rates and fees. Work only with a mortgage professional who has your best interests at heart! While the recent Sub Prime collapse may have closed many of the doors for homeowners in the past, there are still many options available. Too many times we have seen homeowners determine on their own that they cannot qualify for a refinance. The truth is, only your mortgage professional can help you decide. Get professional advice now. A true professional will have access to lenders willing to work with homeowners facing foreclosure and private or “hard money” lenders. They can help you better evaluate your position and determine a course of action.
Selling: When we must, we must. It is better to sell the property now than to have a foreclosure haunt you for the next seven to ten years.
List the Home with a Licensed Agent: This option is for those homeowners that are in the very early stages of the foreclosure process and they have time to sale, in most cases the sale of a home can usually take between one to four months or even longer depending on market conditions. Make sure that you contact a licensed Realtor that is familiar with the foreclosure process to assist you, it is very important to communicate your current situation to the Realtor so that he or she may be alerted to the urgency of the situation. Of course, there are no guarantees that the home will be sold in time to satisfy the foreclosure. The homeowner should be looking into all other options available.
Short Sale Your Home: Many homeowners, who have gotten behind on their house payments and are upside–down on their mortgage, can be saved from foreclosure with the help of a real estate agent who is knowledgeable and can negotiate on the homeowners behalf and walk them through the short sale process. Short sales are truly a win–win situation for all involved: the homeowner, the mortgage company and the potential buyer. The homeowner avoids the devastation of a foreclosure on their credit history, the bank avoids time and the cost of the foreclosure process and holding the property on their books until it sells, a buyer will purchase the property below market value and will get into the home with immediate equity. In order to qualify for a short sale most lenders require that the homeowner show that they are in default status, they must have little to no equity and they must have a legitimate hardship. It is important to acquire the assistance of a licensed real estate agent with short sale experience.
This article is not intended for anything other than to provide general information for common and standard fact situations arising out of foreclosures in Texas. Each situation is unique to the circumstances and needs of the individuals or entities involved. If you are facing foreclosure and you realize that you may be in need of help with your situation, please do not hesitate to call our office and speak to one of our real estate professionals.
