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ANSWERS TO THE QUESTIONS AND SOLUTIONS TO PROBLEMS
ANSWERS TO THE QUESTIONS AND SOLUTIONS TO PROBLEMS
Options to Stop Foreclosure
If you’re behind on your mortgage payments and cannot catch up, foreclosure may seem inevitable. However, there are several options available for you to explore before it comes to that.
Talk to the Loss Mitigation Department of your Lender, Bank or Mortgage Holder. There are a number of options they may provide to avoid foreclosure.
Loan Modification, changes the original terms of the promissory note to reduce the monthly payments, usually while lengthening the term and changing the interest rate. Eligibility terms vary be lender too lender, however many requests get denied by lenders or if approved end up costing the homeowner more than the original mortgage.
Forbearance is a short term solution that allows you to temporarily stop making payments or reduce your payments due to approved financial hardship. Lenders will typically have a strict critia of who will qualify. It’s important to note if approved that interest will still accrue during this time, and you’ll need to make up the missed payments eventually. Extra cost and interest will almost certainly be added.
Refinancing your mortgage may be an option but only if you have equity in your home and good credit. This involves taking out a new loan to pay off your existing mortgage and refinancing your house at a different rate or term. However if you are in a foreclosure situation it’s going to be difficult to qualify for a new loan. So be very careful to depend on this option during the foreclosure process but make make sense prior to that.
Short Sale is when the homeowner sells the property for an amount that is less than owed on the mortgage. The lender must agree to the short-sale and to a deficiency waiver to ensure your debt is paid in full. There may even be authorized relocation expenses. Short-sales tend to be a lengthy and paperwork intensive transaction. You will need an experienced short-sale negotiator to help you through the process and we can help you with this. Short-sales will not significantly hurt your credit rating or your ability to purchase a new home in the future.
Deed in lieu is an arrangement where you turn ownship of your home to the lender to avoid the foreclosure process. The lender must agree take ownership. The disadvantage of this to the homeowner is they lose the property and equity in it plus there will be a negative impact on their credit rating although not as bad as a foreclosure.
Bankrupcy is a legal proceeding initiated when a person or business is unable to pay outstanding debts or obligations. Individuals may file Chapter 7 or Chapter 13. Chapter 7 provides protection from creditors while organising the disposal of unsecured debt through the liquidation of your assets. Chapter 13 allows individuals to qualify for a debt repayment plan under court supervision typically over 3-5 years, this may allow you to keep your property at least while to keep to the repayment plan. Declaring bankruptcy can help relieve your legal obligation to pay debts and possibly save your home, but it will severely damage your credit rating for 10 years Chapter 7 and 7 years Chapter 13. Bankruptcy doesn’t cover certain debts, such as student loans, child support, or government owed taxes.It will also damage your chances of securing future credit or buying a home again because is is part of the public domain and on your record.
Selling your property and right-sizing to a less expensive property may be a smart move, as it allows you to pay off your mortgage and any other debts, and potentially if you have equity walk away with some cash. Also most importantly no foreclosure on your credit record. Best to do this before any foreclosure process has started because that will give you time to sell and find new accommodation without the pressure of a pending forclosure sale date. However if you are already in the foreclosure process, you will need to sell quickly to a well-qualified buyer who has the finance and ability to close before the forclosure auction date. At this stage timing is critical, do not delay a minute to maximize the chance of stopping the foreclosure. To sell you will need a payoff amount from the lender inclusive of any admin or legal cost accrued and details of the foreclosure attorney handling your case. We can help you identify potential buyers.
If you’re facing foreclosure, don’t wait until it’s too late. Contact us today to learn how we can help you and avoid the negative consequences of foreclosure.