Homeowners who are currently in default on their loan(s) or find that they soon will be, have a number of solutions available to stop a dreaded foreclosure from taking place. Though not everyone will qualify for all, solutions are available to every homeowner. Such as:
1) REFINANCE
The Homeowner pays off the existing mortgage loan with the proceeds of a new mortgage loan.
2) REPAYMENT PLAN
The Homeowner is allowed to catch up on missed payments by paying an additional amount monthly, in addition to the regular monthly mortgage payment until the account is brought current.
3) FORBEARANCE PLAN
The Homeowner is allowed to suspend all or part of missed monthly mortgage payments for a specified period of time based on an agreement with the Lender(s). The missed payments and fees may be rolled into the existing balance due or may become part of a Repayment Plan or Loan Modification.
4) LOAN MODIFICATION
Allows for changes to the original terms of the mortgage loan agreement, which may include any combination of the following: an adjustment to the interest rate and/or an extension of the term of the loan and/or an increase in the loan amount (principal balance) to recover the amount plus fees that are past due.
5) BANKRUPTCY 2 Types
1. Chapter 13: For those who want to keep their Property
Chapter 13 Also known as “Reorganization Bankruptcy” takes place when the BK is approved with a “repayment plan” such as credit cards, and car payments. This repayment plan is typically 3 years. So if the person owed 36,000 in debt the monthly payments would be approximately $1000 a month. In chapter 13 you may be able to keep your property through a court approved loan modification know as a reorganization of debt plan.
2. Chapter 7: For those who want out of their property
Chapter 7: In Chapter 7 the court is asked to discharge most of the debts owed by the person filing. In exchange for the discharge of these debts, the Bankruptcy trustee would take the equity from a property and payoff the creditors. This is known as liquidation. This takes place due to the Homeowner’s insolvency. If a property has no equity the property cannot be liquidated as it cannot be sold for the amount owed. And if the mortgage debt is forgiven, but once discharged, the Lender’s right to foreclose on the property remains. A Bankruptcy may stay on the Homeowner’s credit report for 7-10 years. This may affect the Homeowner’s ability to purchase another home and/or make it harder to pass a background check for employment.
6) DEED IN LIEU OF FORECLOSURE
A signed “Deed in Lieu of Foreclosure” document forfeits the Homeowner’s interest in the property back to the Lender. The Lender accepts the deed to property instead of continuing the foreclosure process and incurring more expenses. The Homeowner must then vacate the property. The Lender(s) then sells the property. This sale is usually at an amount less than owed on the mortgage loan. The Lender(s) reserves the right to obtain a personal judgment against the Homeowner for the difference which is known as a Deficiency Judgment.
7) SHORT SALE
A Short Sale occurs when a Lender agrees to accept less than what is owed on a mortgage/debt to settle the account. To qualify for a Short Sale a homeowner must owe more or the property then the proeprty is currently worth and either be in default on their mortgage/loan payments or default is in the very near future.
Many homeowners choose this solution. To find out more information about these solutions, either click the application or contact us links at the top of this page.
At Florida Real Estate Essentials, our goal is to help you move forward with your life and avoiding the damage of foreclosure as well as keeping your dignity intact. If the conditions are right based on the current economic situation, it is our opinion that the best way to avoid foreclosure for most people is by utilizing the Short Sale.
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