How to Avoid Foreclosure
Foreclosure is the worst possible outcome for distressed homeowners. Anything is better than simply giving up and allowing the lender to repossess the collateral without a fight. However, some foreclosure avoidance strategies are much more beneficial than other ones.
- Loan Modifications: Between roughly 2008 and 2012, the government subsidized a number of loan modification plans. These plans were available to homeowners who had experienced a temporary hardship yet wanted to stay in their homes. Many of these programs are time consuming and cumbersome and homeowners get denied for a variety of reasons. We suggest you work with a reputable firm to assist you in getting the modification you deserve. Maryann will speak with you directly and find out your circumstances and if you qualify, she will refer you over to our partner loan modification firm. They will take you step by step through the process and make every attempt to push the lender to allow you to KEEP YOUR HOME in Massachusetts, New Hampshire or Connecticut.
- Some banks have similar programs, but they are few and far between. Moreover, the requirements are hyper-technical and designed to disqualify worthy applicants. Many lenders put borrowers on a hamster wheel. The bank promises relief only to deny it at the last minute because of a technicality. Eventually, the homeowner owes so much that the bank refuses to offer any further options. That’s when the bank auctions your house.
- Refinancing. This may be an option as well as it usually cures the delinquency and may even result in a lower monthly payment. However, in the current environment, only borrowers with excellent credit usually get refinancing offers. Furthermore, if the borrower is underwater on the mortgage, the bank will not refinance under almost any circumstances.
Slowing Down the Foreclosure Process and trying to KEEP your Home.
Once the lender initiates foreclosure proceedings, many people need some additional time to decide what to do next..
There are several options to slow down the process while you decide on a more permanent solution:
- Reinstatement. If the loan is only a few payments delinquent, it may be possible to catch up and temporarily reinstate the loan. This solution is only temporary because it obviously does not address the borrower’s underlying financial hardship. But, reinstatement does give you extra time to carefully choose a more permanent option. Reinstatement involves you paying all the missed payments and arrears (interest, attorney fees and whatever else was rolled in) and making one lump payment to the bank to catch up.
- Bankruptcy. You may be eligible to keep your property by filing a chapter 13 and taking ALL your missed payments and arrears and spreading them out over a 3-5 year period. This involves court approval and all creditors must be on board, but if you keep your payments up this option should allow you to keep your home. You can talk to Maryann directly. She will gauge if she will refer you on to our chapter 13 bankruptcy partner. You have to be committed to stay up with your payments, and those payments are set by the court. The discharge of unsecured debt, like credit cards, sometimes means that the homeowner can commit more funds to the mortgage payment. Advanced options may be available as well, such as a cram-down or a strip-off.The big drawback is that bankruptcy has almost the same negative impact on your credit history as foreclosure. Moreover, a bankruptcy may remain on your credit record even longer than a foreclosure. Still, if you want to stay in the house and the bank has started the foreclosure process, Chapter 13 might be your only option.
- Contest the Process. An attorney can usually deploy a number of delaying tactics, mostly based on procedural ground. However, unless there is a serious, substantive issue with the mortgage, such efforts only bide time.
- Short Sale Preparation. Although the lender will not halt foreclosure proceedings until the owner has a buyer in place, beginning the process typically takes the property off the foreclosure fast track.
In both judicial and non-judicial states, it usually takes quite some time for the foreclosure process to begin. Once things start happening, they happen quickly. These moves may not stop the process, but they may slow things down giving the borrower more time to plan an exit strategy.
If all the above fails, you still have the option to sell the property before the bank forcefully takes if from you.
- Short Sale. When it comes to foreclosure alternatives, a short sale usually has the highest number of positives and the least number of negatives. If the homeowner has a financial hardship and a qualified buyer, the bank may allow the owner to sell the house for less than it’s worth.
With all the available options, it’s very, very important that you take some action to avoid foreclosure. These alternatives are easier to pursue than you might think, and their benefits are very long-lasting.
Contact us today for quick, professional advice and resolution to help you avoid foreclosure.