There may be alternate options for you.
Many homeowners might not know there are other avenues that can be researched to avoid a foreclosure and the affects it will have on your credit. The first step in a different direction would be to talk to a Realtor® who has experience in short sales. Here are some of the alternative options a Realtor® can help you through.
Reinstatement – In this situation a homeowner may have missed some payments but their hardship was temporary. In order to be reinstated they will be required to pay all back payments, late fees, and legal fees, but can be reinstated as they were prior to the hardship.
Forbearance or re-payment plan - This happens in a situation much like the reinstatement, but here the homeowner can’t afford to pay a lump sum payment, so arrangements are made with the mortgage company for a re-payment plan.
Sell the property – If there is equity in the property and the seller acts quickly enough prior to foreclosure by talking to a Realtor and listing their home with them, they maybe be able to sell it and stave off foreclosure action. Make sure you are aware of the time frames before foreclosure so that you and your Realtor® price your home right and you don’t wind up taking any offer that comes along in a panic.
Rent the property – In some cases this might be an option, but it may only be a temporary solution. Speak with a professional property manager who also understands residential real estate and foreclosures.
Refinance – If the homeowner has equity in their home and their credit hasn’t been damaged too much, this might be an option. If the issues that caused the homeowner to become deliquent have been addressed, this can be a good solution.
Mortgage modification – This is an option that requires the homeowner to qualify under new terms for a mortgage. It is similar to a low interest refinance where the lender lowers the interest rate on the existing loan in order to lower the payments.
Short-refi – In a short-refi the mortgage is refinanced with a reduction in the principle (and often the interest rate as well). A borrower will have to show a hardship and will have to qualify for a short-refi.
Deed-in-lieu of foreclosure – Sometimes referred to as a friendly foreclosure is when the homeowner gives the deed to their home back to the bank. This happens very infrequently but can save the mortgage company time and money of having to go through the lengthy and costly foreclosure procedure.
Bankruptcy – Sometimes this allows a homeowner to reorganize their debt and keep the property. If the homeowner does not make the payments after bankruptcy, the home will still foreclose.
Servicemembers Civil Relief Act (SCRA) – This is a temporary relief that was put into place in 2003. Of course depending on your situation it is an avenue to research further.
And last but not least…
Short Sale – If all the above options don’t work a homeowner may decide to pursue a short sale. A short sale is when the homeowner owes more than their home is worth and negotiations need to be made with the mortgage company to accept less than the financed amount that is still due.
All of the above solutions in lieu of foreclosure make it clear the banks don’t want the homes back. What they want is to help homeowners find a solution to foreclosure. If you need help avoiding foreclosure, contact a local Realtor®.
photo courtesy of Nick Bastian Tempe, AZ
This entry was posted on Sunday, June 6th, 2010 at 11:35 AM and is filed under Foreclosures and Short Sales, Home Loans, Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.