Loss Mitigation Programs

You do not have to look far these days to know that the number of foreclosures are on the rise. With the growing mortgage crisis, more and more homeowners are finding themselves unable to refinance their adjustable rate mortgages. Meanwhile, other homeowners seem to be struggling to sell their house when financial crisis hits, as a result of the declining real estate market. Both factors among many others are leading to the growing foreclosure crisis. According to CNN,

  • 1% of households were in some stage of foreclosure in 2007
  • 405,000 families actually lost their home last year
  • Foreclosure fillings went up 97% from the year before
    Most people that are facing foreclosure will walk away from their house without fully realizing their options. With an increase of foreclosures has come an increasing willingness from lenders to work with homeowners, that are now reporting 6 different programs that are offered to the distressed homeowner:

Repayment Plan - The first is probably the most obvious, a repayment plan. A repayment plan is where your lender makes arrangements with you to pay back the payments you missed, a little bit at a time. Perhaps you missed a payment or two, typically your lender will ask you to resume making your monthly mortgage payments, and pay a small and affordable portion of what you owe on top of your monthly payment.

Special Forbearance - Oftentimes, we find that the struggling homeowner cannot get on a repayment plan. Instead, your lender may put you on a special forbearance, where you will a make no monthly payment or a reduced monthly payment. Sometimes, the lender will ask you to be put on a repayment plan when the forbearance has been finished to pay back what you missed, while other times they just modify your loan.

Loan Modification
- A loan modification is one or more changed to the original terms of the loan. At this point in time, lenders are actually reducing interest rates, balances, and even extending the period of the loan to bring your monthly payment down.

Partial Claim - If you have a FHA loan, you may be able to qualify for a partial claim. A partial claim is an interest-free second mortgage that is used to help pay for the first mortgage.

Deed in Lieu of Foreclosure
- Perhaps you have come to the decision that you should just walk away from your house. We recommend trying to sell it first, because if your house has been listed with a real estate agent for more than 30 days, your house in is sell able condition, and if you do not have any liens on your property, then you may be able to sign you house over to your lender and simply "walk away."

Short Sale
- If you are able to find someone who will purchase your home, but is unwilling to pay full price. You may be able to negotiate with your lender to accept a short payoff on the house and you can once again, just "walk away."

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