Foreclosure Help

Understand Foreclosure Terminology

Contact your lender or mortgage company as soon as you realize you may have a problem and may have missed a payment or soon will be missing a payment. Research suggests that at least half of all homeowners that have defaulted on a mortgage or missed payments never contact their lender or mortgage company. This is a mistake. Lenders can discuss options with you to help you work through payments during difficult financial times. Lenders prefer to have you keep your home and most will work with you. Be honest with your lender about your financial circumstances.

Gather as much information as you can. Your Mortgage Company or lender will want to know the details of your circumstances. The more information you can provide a more helpful you’ll find your mortgage company or lender can be. There are many options to avoiding foreclosure and lenders have a sincere interest in helping you avoid the unfortunate circumstance of a foreclosure proceeding. There are numerous relevant terms that you should familiarize yourself with. Here is a partial list that can help you understand some of your foreclosure help options.

Forbearance: Your Mortgage Company or lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Taking advantage of this option works well if you are not too far behind in your payments. Hence the reason to contact your lender as soon as you recognize there is a problem. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.

Repayment Plan: with a repayment plan you make an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. Obviously with a repayment plan to document how you will be able to make the payments. Again been able to document your circumstances is paramount to using a repayment plan as a foreclosure help option. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.

Reinstatement: Your mortgage company may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. For example, your lender may accept a lump payment a year from a signed agreement. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. You may be asked to pay late fees with a reinstatement program.

Loan modification: loan modifications are becoming very popular with mortgage companies these days. The federal government is prompting mortgage companies to make the loan modifications whenever possible. This is all part of the Government foreclosure help program. This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.

You may decide with your mortgage company that you ultimately cannot afford to keep your house. There are still alternatives to help you avoid a pending foreclosure. Some of the alternatives are listed below.

Short Payoff: If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.

Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
Refinancing: While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.

Deed-in-lieu of foreclosure: A deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.

Do what ever you can to avoid foreclosure prevention or loss mitigation companies. If you fall behind in your mortgage payments, many for-profit firms can contact you promising to assist you avoid foreclosure. Some could even appear to be affiliated together with your lender. Several also list their services on the web and ask that you just fill out a referral type online. It is best to avoid dealing with these companies. Most will charge you a hefty fee upfront for info that your lender can give to you for free. You’ll be able to obtain the same workout plan or a better plan free by contacting your lender. It is better to use Your money to pay the mortgage instead.

Many people are contacted by foreclosure recovery companies. Do not fall victim to a foreclosure recovery scam. If any business or individual offers to help you stop foreclosure immediately by signing an agreement authorizing them to act on your behalf or to set up financing for you, do not sign without consulting a professional. This may be a trick to get you to sign over title to your home. You are then vulnerable to losing your home and all of your equity in your home to the so called “rescuer.”

Carefully take a look at your finances. Can you chop spending on optional expenses, delay payments on credit cards or other unsecured debt until you’ve got paid your mortgage? Do you have assets that you may sell to help reinstate your loan? Can anyone in the household get a second job to help with income? These efforts to manage your finances may facilitate you find income to apply to your outstanding payments and will demonstrate to your lender that you’re willing to work on your finances and make sacrifices in order to keep your home.