What are the Options For Homeowners Facing Foreclosure? 1. Try to “make nice” with your lender. You can call your lender and ask them to reinstate the loan. You may be allowed to reinstate or make the loan current by paying a lump sum or making scheduled payments to your lender over a given amount of time. Just explain to them you had a few bad months and things are now better and most lenders will try to work something out with you. 2. IF you have equity, refinance. Usually the lender would refinance the existing loan and include as part of the new loan any late payments, and fees that you would need to regain control. It would all be "wrapped" into one mortgage. 3. Assuming you have no equity and have to sell, you can list your home with a Realtor who has been trained how to do short sales. Almost always your best option. 4. You can give the property back to the lender. If there are no other liens on the title, the lender may agree to take the property back. This process of transferring ownership from you to the lender under these circumstances is called a Deed in Lieu of Foreclosure, and is sometimes referred to as a "friendly foreclosure" because in essence that what it is. You just walk away. You must discuss this with your lender. 5. You can file bankruptcy. First, you need to seek the advice of an attorney. In no way are we trying to provide legal advice. Only an attorney can give legal advice. The two most common "chapters" of bankruptcy are Chapter 7 and Chapter 13. Bankruptcies are "work out" others are "wipe out". Chapter 7 is the "wipe out" and Chapter 13 is the "work out". Bankruptcy is a federal court action designed to help individuals repay their debts or eliminate their debts depending on their circumstances. Chapter 13 bankruptcies are designed to reorganize debts in an effort to repay all debt. Chapter 7 bankruptcies are geared more towards liquidation of assets. Both Chapter 7 and Chapter 13 immediately stop the foreclosure process and any creditors from taking further action against you. (SEE What are the Options for Homeowners PART 2 on the same website where you got this report for more detailed info on 7 vs 13) 6. And finally, you can just let it go to foreclosure. Basically you don't do anything. You leave with nothing in hand and a foreclosure on your credit report. This is without question the worst option of all. Another solution available is the Soldier Relief Act of 1940. When a property is owned by a person in the military and the mortgage payments are not made, then this relief act may stop foreclosure based on certain criteria. The person has to be in active duty in order to qualify. The mortgage loan had to be established before the soldier was called out to active duty. Not only will this stop foreclosure, but it will stop seizure of any personal property while the soldier is actively serving and several months thereafter. Christine R. Willard, Realtor, Broker, GRI, CRS, RECS, e-Pro, LMC, PME Greater Triad Homes 1-800-234-367 extension 3816 OR want to know more? |