9 WAYS TO AVOID FORECLOSURE

1. Do Nothing –

Most things do not go away by themselves, neither will foreclosure. If you do nothing, It will happen. This is the most damaging option to your credit report.

2. Refinance/Payoff-

Refinancing requires a complete payoff of the old loan through the establishment of a new loan. Equity is needed for a lender to refinance.

3. Reinstatement –

This pays off all of the defaulted payments plus any attorney fees, late fees etc. and brings the loan to current status.

4. Loan Modification-

This process has become very popular these days. Within the existing loan, one or more of the terms is modified to make payments more affordable. It almost NEVER reduces the amount of the note.

5. Forbearance –

The lender may forgive some defaulted amount and make a repayment plan based upon a specific financial situation. This is done on a case by case situation.

6. Partial Claim –

A lender makes a junior position loan that includes back payments and fees etc. Equity is usually needed for this to be a viable option.

7. Deed In Lieu of Foreclosure –

This is known as the friendly foreclosure and only works when there is one lender involved. The homeowner agrees to hand the keys to the lender who agrees to accept them.

8. Bankruptcy –

Chapter 7 is a total liquidation to settle personal debt.

Chapter 13 is a restructured debt plan

Chapter 11 is a business debt solution.

A reputable bankruptcy attorney MUST always be sought to discuss this option. There must be complete and honest disclosure. Caution is recommended here.

9. Sale / Short Sale.-

A sale of the property pays off the note completely. Any equity belongs to the former homeowner. In the case where the property is worth less than amount owed, a short sale becomes a viable solution. The lender agrees to take current market value as a settlement of the debt. The former homeowner is released from the note and is usually able to start over in a couple of years. For many this is the BEST solution.

   IF YOU ARE GOING TO SELL SHORT,

MAKE SURE YOU CONTACT SOMEONE WHO SPECIALIZES

IN THIS COMPLEX TRANSACTION.