Options for Homeowners facing foreclosure

There are a variety of options available as well as legal strategies for homeowners who are facing foreclosure.  Foreclosure Options Network was created to empower homeowners with a range of options available and then homeowners decide which option is right for them.  The Foreclosure Options Network has vetted experts in their fields to provide assistance to homeowners.  

The following are general ideas and concepts.  The Foreclosure Options Network is not providing legal or financial advice.  These strategies are offered as a general overview and each state law is different.  We suggest that you work with legal, tax and real estate professionals to act as your advocate to assist you with the available options.

Option 1:

Do Nothing.  You have the right to do absolutely nothing and allow a lender to foreclose on the property. Obviously there are pros and cons to this option.  Depending on your state of residence what type of loan(s) you have on the property.  How will your lender foreclosure on your property either, Judicial process or a Non-Judicial process. Depending on State and Federal Laws, the types of loan(s) Recourse or Non-Recourse will determine your liability to the debts.  You might want to know your State Law regarding the Statute of limitations. You also have the potential tax ramifications both State and Federal.  Most lenders will report a Foreclosure on your credit file, which is a derogatory remark.  A foreclosure will lower your credit score by 80 points.  A foreclosure can remain on your credit file for 7 years. 

Option 2

Refinance.  If you qualify for a refinance, then this might be a viable option for you. A Credit Union or a Mortgage Broker in your area that offers mortgages will be able to see if a home refinance is a viable option for you.  A refinance strategy might be appropriate if you have equity in your home, you can qualify for bank financing with your credit rating, and the property meets the appraised value and is accepted by the new lender. *If you are self employed and are finding it hard to refinance, we suggest you implement a tax strategy so that you can qualify for a refinance in the coming months.

Option

Forbearance. If you are behind on your payments due to a temporary job loss, then you might be able to work with your lender to begin paying back the missed payments in addition to your current mortgage payment in order to bring the entire loan current.  Some lenders will offer a forbearance contract, typically if you can use forbearance to become current in 6 months you might qualify for this option.

Option 4

Loan Modification. A loan modification means to change the existing terms of your current loan(s).  In some cases, the current loan has reset and the monthly payments have increased.  You might be able to negotiate with the lender to modify an interest only payment.  Or, you might also be able to modify to a lower interest rate. Of course, you might be able to modify the loan to a 30 year fixed rate for the duration of the loan.  Sometimes lenders in second position will offer a principle write down. If you have a HELOC on your property then you might be able to modify that monthly payment.  Please keep in mind that only about 40% of the loan modifications are successful long term.  The other 60% default again within 4 months.
It is our experience that a homeowner should work with an 'advocate' a Loan Modification Specialist in order to negotiate with banks or lenders in order to obtain a successful loan modification.

Option 5

Sell. You can sell the property.  If there is equity in the property, then you might be able to sell the property and get some money to move on with your life.  At this point, you might be able to get right back into another house with a better mortgage product.  Another method is to rent for a while and re-enter the housing market in the future in a mortgage and a payment you can afford.

Option 6

Short Sale. Sell the property using a Short Sale strategy.  If there is no equity in the property, then a short sale might be a viable option for you.  You may want to consider if the lender will issue you a deficiency, tax ramifications, as well as the potential credit hit. It is our opinion that a homeowner should begin exploring a Short Sale with a Short Sale Specialist.  A lShort Sale Specialist will work as your advocate in representing you to the lender and negotiate the debt as well as the potential hit to your credit rating.  This is a key component to a short sale.  In some cases, the Short Sale Specialist will also work with a local realtor who will be hired to list the property on the MLS market the property for sale. In the end these are the cleanest well orchestrated Short Sales.  Because short sales are so complicated, we feel strongly that a Short Sale Specialist is necessary and a realtor is a bonus to the transaction.

Option 7

Deed in Lieu of foreclosure. A Deed in Lieu of foreclosure is also called a “friendly foreclosure."  If there is only one loan on the property and it was a purchase loan, then this might be a viable option for you.  The lender will loose more money accepting a Deed in Lieu of a foreclosure than they would with a traditional foreclosure. 

Option 8

Forensic Loan Audit: This is a legal strategy that begins with a forensic loan audit.  After your audit, you will get a report of all the violations that are in your original loan(s). Truth in Lending Act (TILA) RESPA Violations, GFE Compliance, Usury Law, Servicing Violations, Predatory Lending and more.  You would then use that report and work with an experienced negotiator for either a loan modification or a short sale. In our experience this strategy does result in a loan modification with a principle write down and a favorable interest rate long term.

Option 9

Bankruptcy is a legal strategy that many homeowners use in order to keep their homes. Depending on if you qualify for Bankruptcy using the M.E.A.N.S. test and what Chapter Bankruptcy you are considering.  The advantage is that you might be able to keep your home and gain relief with other debts you may have.  Once your bankruptcy is discharged, we would suggest that you sign up for credit restoration services in order to repair and rebuild your credit rating.

This is a general over view of the options available to homeowners who are threatened with foreclosure.  Please watch the free video decide which option is right for you and call our Toll Free number for a vetted expert who can help you.  Foreclosure Options Network 877-747-4386.