Options and Solutions for Homeowners in Distress
The current US housing market and national financial crisis have caused
untold stress and heartache for many American families. Foreclosure is
one of the most devastating financial challenges that a family can face
and one that many times can be avoided. The options for foreclosure
are many, following is a brief explanation of these solutions. Now more
than ever, it is important for you to understand these options to find
the best solutions for you.
A reinstatement is the simplest solution for a foreclosure, however it is often
the most difficult. The homeowner simply requests to know the total amount
owed to the mortgage company to date, and then pays it. This solution does
not require the lender’s approval and will ‘reinstate’ a mortgage up to the
day before the final foreclosure sale.
A forbearance or repayment plan involves the homeowner negotiating with
the mortgage company to allow them to repay back payments over a period
of time. The homeowner typically makes their current mortgage payment in
addition to a portion of the back payments they owe.
REINSTATEMENT
FORBEARANCE OR REPAYMENT PLAN
Does not require Mortgage Company or lender’s approval.
Requires that a homeowner be able to pay all back payments, fines and
fees immediately.
Allows the homeowner to make back payments over time.
Requires that a homeowner be in a financial position to pay not only their
current mortgage, but also a portion of the back payments owed. Some mortgage
companies will require a homeowner to ‘qualify’ for forbearance.
The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in
the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner.
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A mortgage modification involves the reduction of one of the following:
the interest rate on the loan, the principal balance of the loan, the term of
the loan, or any or all of the above. This typically results in a lower payment
for the homeowner and a more affordable mortgage.
MORTGAGE MODIFICATION
Reduces the payment a homeowner is required to make on a monthly basis
and may reduce the principal balance of the loan.
Requires that a homeowner ‘qualify’ for the new payment and will often
require full documentation. Lender has to be actively pursuing modifications.
A homeowner with a mortgage payment low enough that market rent
will allow it to be paid can convert the property to a rental and use the
rental income to pay the mortgage.
RENT THE PROPERTY
Allows homeowner to keep property indefinitely.
The issues that can arise with a rental property are many, and rent often does
not cover the full cost of property ownership and maintenance.
Also known as a ‘friendly foreclosure’, a deed in lieu allows the homeowner
to return the property to the lender rather than go through the foreclosure
process. A deed in lieu requires lender approval and requires the homeowner
to vacate the property.
DEED IN LIEU OF FORECLOSURE
Many times in a successful deed in lieu the lender will forego their right
to a deficiency judgment.
Requires that a homeowner vacate the property and may be reported
to credit bureaus as a foreclosure.
Options and Solutions for Homeowners in Distress
Page
The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in
the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner.
©2009 Distressed Property Institute, LLC, All Rights Reserved
Provided by:
Darren Stevens, CDPE, ePro, Sereno Group Real Estate
214 Los Gatos-Saratoga Road, Los Gatos, CA 95030
408-887-5004 | ddstevens@serenogroup.com
http://www.distressedrealestatesolutions.com/
Prepared exclusively for:
John Public
Contact us today for a complimentary and confidential consultation.
4
Bankruptcy has been marketed by many as a ‘foreclosure solution’, which it
can be in some states and specific situations. If the homeowner has non-mortgage
debts with payments causing a hardship—to the homeowner falling short of paying
the mortgage payments, and personal bankruptcy will eliminate these debts - this
may be a viable solution.
BANKRUPTCY
Does not require lender approval.
If a homeowner cannot afford their mortgage payment, a bankruptcy
will only stall (not stop) the foreclosure process. Bankruptcy can be costly.
If a homeowner has sufficient equity in the property and his/her credit is
still in good standing, a mortgage refinance may be an option.
REFINANCE
In some cases this will lower payments.
In today’s market, a refinance will almost always raise mortgage payments
and is an expensive process.
If a member of the military is experiencing financial distress due to
deployment and that person can show that their debt was entered into prior
to deployment they may qualify for relief under the Servicemembers Civil
Relief Act. The American Bar Association has a network of attorneys that will
work with Servicemembers in relation to qualifying for this relief.
SERVICEMEMBERS CIVIL RELIEF ACT (MILITARY PERSONNEL ONLY)
If qualified this will lower payments on all consumer debt in addition to
mortgage payments.
Must be active military to qualify.
Options and Solutions for Homeowners in Distress
Page
©2009 Distressed Property Institute, LLC, All Rights Reserved
The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in
the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner.
©2009 Distressed Property Institute, LLC, All Rights Reserved
Provided by:
Darren Stevens, CDPE, ePro, Sereno Group Real Estate
214 Los Gatos-Saratoga Road, Los Gatos, CA 95030
408-887-5004 | ddstevens@serenogroup.com
http://www.distressedrealestatesolutions.com/
Prepared exclusively for:
John Public
Contact us today for a complimentary and confidential consultation.
5
If a homeowner has sufficient equity in the property, they can list the property
with a qualified agent that understands the foreclosure process in their area
and sell their property.
SELL THE PROPERTY
Allows homeowner to avoid foreclosure and harvest some of theirequity.
In many cases today homeowners do not have sufficient equity to sell their
property without negotiating a short sale (see next solution).
If a homeowner owes more on their property than it is currently worth, then
they can hire a qualified real estate agent to market and sell the property through
the negotiation of a short sale with their lender. This typically requires the property
to be listed on the market, and the homeowner must have a financial hardship to
qualify. Hardship can be simply defined as a material change in the financial stability
of the homeowner between the date of home purchase and the date of the short sale
negotiation. Acceptable hardships include, but are not limited to: mortgage payment
increase, job loss, divorce, excessive debt, forced or unplanned relocation, and others.
SHORT SALE
Allows homeowner to avoid foreclosure and salvage some of their credit
rating card. Keep a foreclosure off the public record for an individual. In many
cases will allow homeowner to avoid a deficiency judgment. Borrower may
qualify for another mortgage in as little as 24 months (5 years for foreclosure).
Short sales can be trying process in which a homeowner is best served by
contracting with a qualified real estate agent to guide the way.
This represents only a summary of some of the solutions available to homeowners facing
foreclosure. Please call me today for a free confidential evaluation of your individual
situation, property value and possible options.
Options and Solutions for Homeowners in Distress
Page
The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in
the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner