What Are the Alternatives to Foreclosure
Posted on February 20, 2010
Filed Under foreclosure investment property |
If you are in the same situation as many other people today are, you may be looking for alternatives to foreclosure. To keep the foreclosure process from consuming your most valuable asset you will want to make your plan of attack and execute it early on. Strategic planning is your wisest course of action. You must know exactly what your options are and how to arrive at any given exit strategy at any given time in order to ensure the most successful course of action in avoiding foreclosure.
In any foreclosure situation time is never on your side. The ticking clock looms everywhere and arming yourself with knowledge will be your arsenal to fight this enemy. Whether your state offers a long process or shore process, you must take action quickly and efficiently in order to protect yourself and your assets.
There are several things you could do as alternatives to foreclosure. You can choose to leisurely sell your home, enter into a forbearance agreement with your lender, or simply ignore the problem and hope it goes away. The last option, while a joke, tends to be one most people choose to take. However, you’re smarter than that or you would not be reading this article. Depending on how far into foreclosure process you are will dictate what your options are.
Remember the bank doesn’t want your property. The bank is not in the business of buying and selling homes. The bank is not a real estate investment company. If there is equity in your property, you have a reliable source of income, and your credit rating isn’t too damaged consider refinancing your home. You may have to pay a higher interest rate because after all you have missed a couple of mortgage payments, but a higher interest rate is better than losing your home.
If you are early on in the foreclosure process this is a good time to consider a forbearance agreement with your lender. The forbearance agreement is a contract between you and your lender to effectively refinance any missed payments thus far and to begin making payments again. In the event of a job loss and you can no longer make your payments a forbearance agreement will not be a solution. For your lender to consider a forbearance agreement there will be qualifications that must be met the first of which will be having it probable income.
If you have a verifiable income and your lender agrees to a forbearance agreement but you are somewhat lacking enough income to cover your payment consider taking a second job. Sometimes a part time night job is all you need to gain the extra income to cover your payment. Oftentimes if you have a verifiable income the lender will consider refinancing your mortgage to meet the monthly payment you can afford.
Not taking action is the most costly course of action you can take during the foreclosure process. You’ll want of a solid plan and be ready to execute the plan to protect your home, your most valuable asset.
Corey Landis
http://www.articlesbase.com/finance-articles/what-are-the-alternatives-to-foreclosure-725496.html
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6 Responses to “What Are the Alternatives to Foreclosure”
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What is the alternative for foreclosure?
My house worth $250K at this market, my loan is $280K, my interest jumped up to 11%. it doesn’t make sence to keep the house anymore, i already paid 70k on interest over 3 years, but i don’t want to file foreclosure, what should i do?
1. You can sell it at a loss
2. You can rent it
3.you can let the mortgage company foreclose on it. Unless you file bankruptcy, you will most likely still owe money (possibly a large amount) after the foreclosure.
4. You can continue to pay on it.
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"It doesn’t make sense" isn’t the point. Are you ABLE to keep the house? If you can, you should instead of incurring a huge loss or a foreclosure.
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I’m sorry about your situation. You really didn’t go into too much detail. Some of the other folks may have better solutions.
You don’t file foreclosure. The lender, through its attorney files the necessary paperwork.
You may be able to do a "Deed in Lieu of Foreclosure".
You have that deed prepared, sign it and have it notarized in front of a Notary Public. THEN you FedEx it [or using any other courier service] to the attorney for the lender OR the lender, itself.
This is something you should check on.
THEN you move - ASAP.
Thanks for asking your Q! I enjoyed answering it!
VTY,
Ron Berue
Yes, that is my real last name!
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My wonderful family!
In the real estate business over 34 years in PA.
My wonderful coaches & mentors. Yes, after all these years I continue having them in my corner!
THE ABSOLUTE BEST, MOST WONDERFUL real estate investment group in the world, which I was very proud to be a member of!
"THE University of Hard Knocks"
Call your lenders corporate office and ask to speak with someone in their "relief" department, not foreclosure, but the department that might be able to help you.
These lenders can’t afford more foreclosures, so they making deals to keep you in your home. Fight for this, you’ve earned it. Even if you have to call every Senator and Congressman in your state to get attention. Do it. Raise hell and put a chunk under it as my mom would say. This isn’t right. But we have to fight for this.
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appraiser/realtor - in the same shape financially.
There are really no magical ways to end the foreclosure process — but there are enough tools that homeowners have available, that they can choose from a number of options to help them out of their hardship situations.
1. Save up and get current on the mortgage by paying back the payments you’ve missed, plus the interest, late fees, attorney fees, etc. Understand that there are often thousands of dollars of extra charges that are added once you start missing payments and especially if the lender hires a law firm to pursue the foreclosure.
2. Work with the lender to put together a repayment plan, which would require you to put down part of the amount you are behind now and pay back the rest over a period of months, along with you current monthly payment. Usually, repayment plans can be worked out through your lender’s loss mitigation department, and will result in you paying almost twice as much per month as your regular mortgage payment. This is to help you get caught up on the payments you missed while you are paying your original monthly obligation.
3. Work with the lender to modify the terms of the loan to say that the missed payments are spread out over the life of the loan or put on the back end of the loan. This is called a mortgage modification or loan modification. Some lenders will not do this because they do not hold the paper to be able to modify it. This is especially true for mortgage servicing companies, who only service their loans and collect payments, but who do not own the loans.
4. Refinance — find a hard money lender or traditional lender that will consider foreclosure refinance loans. Qualifications include lots of equity and lots of income, since your interest rate will probably be over 10%. Foreclosure refinance loans can be difficult to qualify for and may result in higher monthly payments, but they are a good way for homeowners to get a fresh start with a new note and new lender.
5. If you have an FHA loan, you can get a one-time loan from the FHA that will bring you current and is placed as a lien on the property that you would have to pay back if you sell or refinance the home. This is called a partial claim. You would have to contact the FHA directly for this one time payout to get you caught back up on your mortgage.
6. Sell to a private investor or friend/family member and lease/rent the property back from them. That clears off the foreclosure loan on the property and uses someone else’s good credit to get a new loan and allows you to stay in the property. Investors can also work out short sales on properties, allow they usually do this in the hope of flipping the property by reselling it quickly at a profit.
7. Bankruptcy will stop the foreclosure process, but is usually an expensive alternative to setting up a repayment plan, mentioned above. Attorney fees, trustee fees, court costs, and high monthly payments cause a lot of people to fail their bankruptcies. Only consider bankruptcy if you desperately want to prevent foreclosure and if you have a significant amount of income you can dedicate towards the bankruptcy payments.
8. Short sales are a good option if you owe more on the property than it is currently worth. A short sale means the bank accepts less than what they are actually owed, and would allow you to get out of the loan, at least. The bank would not be able to come after you for the rest of the loan amount, since, by accepting a lower amount, they forgive the rest of the debt owed on the mortgage.
9. Sell outright if the property is worth enough and you have a willing and able buyer. List the house yourself of through a local real estate broker. In some cases, it is the right decision just to unload the house to stop foreclosure and focus on repairing your credit until you can purchase a new, more affordable home in a few years.
10. If 1-9 do not work, you can offer the bank a deed in lieu of foreclosure, which means you’re voluntarily giving the property back to the bank and they are agreeing that the property is payment in full of the loan. This is not much better than a foreclosure, and you have to leave the property anyway, but it will prevent the sheriff sale and eviction process. The bank will not be able to ask for any extra money or sue you for a deficiency judgment, because they accept the property itself as satisfaction of the loan.
11. If 1-10 do not work, you can just move out and walk away and forget about the property. This is definitely not recommended if you care about your credit and plan to borrow money for several years, but foreclosure should teach you not to rely on banks to help you out when you face a hardship. All they really do is promise great deals when you think of going with them, and then throw you to the foreclosure dogs if you miss a payment. Many homeowners simply walk away because the foreclosure situation is so intimidating, but, as listed above, there are numerous options that are better than just giving up on the property.
Those are the most common options that can be used to stop foreclosure. There are a few others (suing your bank, etc.), but they involve much more cost and legal involvement and may not end up stopping the foreclosure process in the end.
Good luck.
ForeclosureFish
References :
Searched Google for "ways to stop foreclosure"