If you are behind in your payments and facing losing your home to foreclosure, you are not alone. A lot of people are wondering how to avoid foreclosure. There are historic levels of people facing foreclosure in recent years which has led to the creation of numerous government programs to help people avoid the foreclosure process. In spite of what many people may think, banks and lenders don’t want to foreclose on your home any more then you want them to. It is expensive and time consuming for them to go through the foreclosure process, and they are willing to work with you if it will save them more money then foreclosing on your home. Everyone’s situation is different, so programs that will work for some won’t work for others. Here are the basic options you have if you are behind on your payments due to a unforeseen hardship.
Consult with a professional
It is always recommended that you talk with a legal or tax professional to help you know what the ramifications of your choices involved with your situation. There are also housing counseling agencies that are approved by the US Department of Housing that offer free mortgage default counseling. Here in Central Oregon, NeighborImpact.org, is the best local choice if you want to seek counseling.
Refinancing or Loan Modification
The next option would be to contact your lender and see if they have a refinancing or loan modification program that you qualify for with your situation. The government has several programs in place to provide incentives to lenders and home owners to be able to restructure loans to avoid foreclosure. Since there are a lot of different programs and everyone’s situation is different, an excellent resource that explains the various programs is the US Government’s Making Home Affordable website. Generally when lenders are reviewing your paperwork to make a decision on whether or not to modify your loan, it comes down to if it is less costly for them to modify your loan then to follow through with the foreclosure process.
Loan modification won’t work for everyone, especially if you need to move or home ownership just won’t work for you anymore. If the current value of your home is less then what your loan balance is, then you will need to look into the possibility of a short sale. These days most people are probably familiar with the term Short Sale. The simplest definition of a short sale is when you sell your home for less then your loan payoff amount is. The issue that makes short sales complicated is that since you are not paying back all that is owed to the lender, they need to determine if that option is better for them then foreclosing on your home. Again, the government currently has programs in place which if you qualify for them, will provide incentives to you and the lender to help encourage a short sale resolution. You can view the programs and the requirements on the Making Home Affordable website. If you need to pursue the short sale route to try and sell your home, you will need to hire a real estate broker to help you with the process. It is important that you hire one that is familiar with short sales and the foreclosure process because it is a complicated process that must be done correctly or it could cause delays or a rejection for approval of the short sale. I have received special training and hold a Short Sales and Foreclosure Resource Certification (SFR) from the Nation Association of Realtors. If you are thinking that a short sale might be your best option, and you live in Central Oregon, I can help you navigate the complexities of the short sale process.
Deed in Lieu of
Sometimes a short sale doesn’t work. Maybe there wasn’t enough time left, or you just couldn’t find a buyer for what the lender would agree to sell the house for. A Deed in Lieu of, also known as a friendly foreclosure, could be the last option before the actual foreclosure happens. With a Dee in Lieu of, the owner signs the title over to the bank instead of forcing the bank to do a judicial foreclosure or a trustee sale of the home. If you are thinking of going this route you will want to talk with a legal professional to go over your contracts and advise you of any ramifications of this decision.
This is the end result if you choose to do nothing, or if all the previous options didn’t work out for you. Again, it is recommended you talk with a tax or legal professional to go over the effects of a foreclosure.
If you are behind on your payments and facing foreclosure, it is a stressful time for you. If you haven’t already I encourage you to talk with a legal professional or a HUD approved housing councilor and to pursue the option of a loan modification. If you have already tried this or if you just need to sell the house and get out from under it I can help you.
Call or e-mail me today for a free confidential meeting at your home to listen to your situation and help you with the possibility of doing a short sale on your home.