Are there Alternatives to Foreclosures?

You may be facing foreclosure... So what are your options?

Options when facing Foreclosure

1.  Do Nothing - If a homeowner does nothing, they most likely will lose their home at a foreclosure auction.  Loan applicatons generally ask if the applicant has ever been foreclosed upon.  Credit reports also disclose this damaging information.  Not the best option.

2.  Reinstatement - If in default, the borrower may pay all past due amounts including: back interest, Attorney / Trustee fees, late fees, an taxes, can bring the loan current.

3.  Loan Modification - The ability to restructure the current mortgage between you and your lender.  It is a change in one or more of the loan terms which results in a payment the homeowner can afford.  

4.  Forebearance - The Lender may arrange a repayment plan based on the homeowner's financial situation.  The lender could provide a temporary payment reduction or suspension of payments.  information will be required from the lender to show that you are able to meet the new payment plan.

5.  Deed-In-Lieu of Foreclosure - Give the property back to the bank foreclosing.  Banks generally require the home be well maintained, all mortgage payments and taxes must becurrent.  Most loan applications as if the borrower has ever given property back to a bank.

6.  Bankruptcy - This option can liquidate debt and/or aloow more time.  You will need to retain a qualified bakruptcy attorney.

-----Chapter 7 (Liquidation)  To completely settle personal debt.

-----Chapter 13 (Wage Earner Plan - Individual)  Payments are made toward a plan to pay off debts in 3-5 years.

-----Chapter 11 (Business Reorganization)  A business debt solution.

7.  Sale - If the propery has equity (money left over after all loans are paid), the homeowner may sell the home without lender approval through a conventional traditional home sale.  On the other hand, a Short-Sale, also known as a pre-foreclosure sale, can be negotiated with your lender if what is owed is MORE than the property's value.