Prior to talking to the lender, assemble all of your paperwork.  It is important to have ALL of your financial documentation ready when you talk with a lender!  When you call for a workout plan, lenders will start a file.  If the file isn’t complete with all of the required documentation they require, your request will be ignored.  Again, time is not your friend!  Have all the requested documentation delivered to the lender as soon as possible!  Once the lender has the complete financial file, they will see if you qualify for any of the following options:

Reinstating the loan -  You may be allowed to reinstate your loan, or bring your current loan up to date, by paying a lump-sum payment.  You may also be able to make scheduled payments to your lender over a specified period of time.  This usually works well if you have had a temporary financial setback, but the problem is over and you can now make your full monthly mortgage payment.

Work-out plan  (also known as Loan Modification) - Lenders can alter your loan, based on your financial situation.  With a loan modification, the lender may decrease the interest rate of the note, increase the time you have to pay back the loan, decrease the loan principal, waive late fees or second mortgages.  They may also allow past-due interest and escrow amounts on the balance to be re-amortized with a new loan.

Alternative Payment Plan -  The lender may let you repay your delinquent amount over a period of time, usually no more than 12 months. The new, higher monthly alternative payment is added to the usual mortgage payment.  This option helps the homeowner bring the account up to date within a specified time period.

Partial Claim – This is only used with FHA mortgages.  The Department of Housing and Urban Development (HUD) may advance a loan to the delinquent homeowner to help repay the past-due interest and escrow amounts.  You may qualify if: 1) your loan is between 4 and 12 months delinquent;  2) your  mortgage  is not in foreclosure  and 3) you are able to start making full mortgage payments.   If this is an option, you would sign a promissory note .  The promissory note is interest-free, and will be due if you sell your property.

Deed in Lieu of Foreclosure – This will allow a delinquent homeowner to voluntarily transfer the property back to the bank that holds the lien.    Essentially, it is giving your house back to the bank.  To qualify, you would have to meet the following requirements: 1) you are in default and don't qualify for any other mortgage assistance plan; 2) you could not sell your house prior to the foreclosure and 3) you don't have another FHA mortgage in default.  It doesn’t take as long as a foreclosure, but can really hurt your credit score.  It will also not release secondary liens. 

Special Forbearance. – The lender can make a repayment plan that is based upon your financial situation.  It could include suspension of your payments, or a temporary reduction of the monthly amount. 

Pre-foreclosure sale - You can sell your property and pay off your mortgage to avoid foreclosure.  This works when you have equity in your house.  If the selling price is high enough to pay off your mortgage and closing costs, this might be a good option to take.  You may qualify for a pre-foreclosure sale if you meet certain criteria.  Ask your lender for its requirements if you are willing to sell your home.

Short Sale – The bank that holds the note on the house may agree to allow the homeowner to sell the house for less than is owed, or “short” of the balance on the note.  This scenario works well when the balance of the mortgage is higher than the market value of the home.  It is also less damaging to your credit report. 

Sell your house – If you want to sell your home, there are a few key points to remember:  1)  price your home to sell, not to negotiate.  Currently, there is an oversupply of homes on the market.  You want to make yours stand above the competition.  Price it to be a good value.  2)  Have your home staged.  There are home staging professionals that will help you prepare to make your house be attractive to buyers.  There may be a little or a lot to do.   Hire a professional, like myself, if you want your house to look it’s best when viewed by

buyers!  3)  Make it easy for buyers to see your house.  Don’t put a lot of restrictions on showings. 

Foreclosure fact:  Whether you sell your home through a short sale of give the bank your home by signing a deed in lieu of foreclosure, you can still have a deficiency judgment placed against you!   Seek legal counsel on how to avoid having a judgment placed on your credit report

 

Call today for your free, no-obligation consultation.  We welcome the opportunity to sit down with you to strategize a plan that will help you either keep your home and/or help your credit from being severely damaged for 7 to 10 years.

 

Foreclosure fact:   There are scam artist out there.  Here are several precautions that should help you avoid being "taken":

·         Get everything in writing.  Don’t go by

verbal agreements.

·         Understand everything you are signing.

·         Beware of any loan assumption that don’t released you from your mortgage debt

·         Always consult with a lawyer before entering into any contract regarding your home.

 

 

What is needed for a short sale?

• Tax returns for the previous two years
• Two months of the most recent bank statements
• Two months of the most recent pay stubs
• Hardship letter
• Financial statement

 

 

If you don’t know who to call, there are agencies that can assist you.  Call 1-800-569-4287 or TDD 1-800-877-8339 for the housing counseling agency nearest you