So, your house is in foreclosure… now what?!? Try to look at the situation without attaching your emotions. If viewing the situation from a strictly business viewpoint, you can more successfully analyze which option might best suit your needs and desires and move you towards resolving your financial difficulty. One very important thing to remember: Time is of the essence! Nine options when facing Foreclosure 1. Do Nothing If you do nothing, you will most likely lose your home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option. Alternatives to Foreclosure 2. Payoff/Refinance Completely pay off the entire loan amount plus any default amount and fees. Usually this is accomplished by refinancing of the debt. The new debt is normally at a higher interest rate and there may be a prepayment penalty because of the recent default. WIth this option there should be equity in your home. 3. Reinstatement Paying the entire default amount, interest, attorney fees, late fees, taxes, missed payments and any other fees. 4. Loan Modification– Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow you to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment. 5. Forbearance Lender may be able to arrange a repayment plan based on your financial situation. The lender may even be able to 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 requirements 6. Partial Claim– A loan from the lender for a 2nd loan to include back payments, costs and fees. 7. Deed in Lieu of Foreclosure Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened. 8. Bankruptcy This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney. --Chapter 7 (Liquidation) To completely settle personal debt. --Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years. --Chapter 11 (Business Reorganization) A business debt solution. 9. Sale If the property has equity (money left over after all loans and encumbrances are paid) you may sell the home without lender approval through a conventional home sale. In this case, you will get cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value. CALL Susan Capuano,llc 813-767-7063
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