Before Your Lender Forecloses On Your Home

Posted by admin on Oct 31, 2008

The number of Massachusetts homeowners that have received foreclosure notices is rapidly skyrocketing.  2007 was the worst year in history for foreclosures in Massachusetts and thus far 2008 doesn’t seem to be getting any better.  However, having received a foreclosure notice does not mean that you are in a hopeless situation. You can still keep your house. Although the clock is ticking, there are still available options for you before your lender forecloses on your home. We call these steps foreclosure workouts. These steps are aimed at stopping the foreclosure process. These are available to give you the option of keeping your property with easier paying plans or suspending current payments; or a graceful exit from your home without bad credit or declaring bankruptcy.

1. Loan modification
This option allows you to keep your house. Loan modification is a request made to your lender for an adjustment of the loan terms. Of course, the adjustments should be favorable to you and your budget. The lender may agree to reduce your interest rate or even the principal payment, suspend your payment and extending your payment terms, thereby lowering the monthly installment, or combinations of these.

2. Short sale
With the lender’s consent, you can sell your property at a price lower than its actual market value. Although this may sound like a desperate measure, it is a whole lot better than a foreclosure. The best option you can get from this is to make your lender agree that the amount for which the house can be sold will cover what you owe. Any deficiency will be considered as paid.

3. Forbearance
This is basically a request to suspend the payment of monthly amortization within a specific period. This is ideal if you are experiencing temporary setbacks in your budget. After the agreed suspension period is over, and hopefully your crisis also is over, your payment shall continue as usual.

4. Deed in lieu of foreclosure
With a deed in lieu of foreclosure, you and your lender agree that you will give back the property in exchange for the forgiveness of all your payables to them, including whatever fees and deficiencies. Although this will appear in your credit records, it will not be as damaging as a foreclosure.

Any of these steps requires huge amounts of work and time. As you will notice, all of the four steps above depend on the lender for their success. This makes it a very complicated task. This requires the dedication of a professional who has experience in these kinds of settlements. It is very important to seek the help of foreclosure workout experts to ensure results.

Find a third party that has a team of professional and dedicated experts to help you in identifying the best steps for you to take. Once identified, these experts will negotiate directly with your lender, on your behalf, to expedite the process.  The real key here is to do something before it is too late.