Strategies to Avoid Foreclosure in Tallahassee and Surrounding Areas
• Be Proactive about the problem when the first warning signs appear. Not only does this reduce the stress of not knowing what is going on but it makes it easier for the creditors to work out a plan.
• Contact your lender when you become aware that you may have a problem. The last thing that a lender wants is to foreclose on the property. Financial Institutions lose a significant amount of money by foreclosing on a property($50,000=/-). Foreclosure is a lose/lose for the lender and the homeowner. It is important to be honest and forthright with your discussions and be prepared to discuss the reasons for your problem.
• Read the mail. Not knowing does not solve the problem it just delays the final result and increases the pain. By not reading the mail a person avoids the opportunity to get help before it is too late.
• Contact HUD approved housing counselor. CALL 800-569-4287 to find a nearby counselor, or go to www.hud.gov.
• Prioritize your spending by paying for the necessities of life first. Always pay the house payment and health insurance first.
• Find ways to generate cash. Sell those items that have value but are not used or needed, or seek a part time job to get through the crisis. Not only does this reduce the emotional and financial stress but it provides evidence to the lender that the borrower is proactively
• seeing a way to remedy a bad situation.
• Don’t get scammed by a private “foreclosure prevention specialist,” instead go to www.hud.gov. to obtain valid information about foreclosure prevention.
Alternatives to Foreclosure in Tallahassee and Surrounding Areas
• Forbearance- Under this plan the lender may allow the borrower to skip a payment or make a partial payment if the borrower can suggest a reasonable plan to catch up on the amount in arrears. This could be very favorable for someone who has been temporarily out of work or has experienced a very unusual unavoidable expense such as sickness or an emergency. The caveat here is that just because the lender has done it once does not necessarily mean that the lender will do this again in the future.
• Reinstatement- Similar to Forbearance but under this plan the borrower agrees make a lump sum payment in the future to bring the mortgage “up to date”. This could be made possible by Tax Refunds, future bonuses, anticipated increase in family income or something similar. The difference here is a lump sum payment.
• Repayment Plan- If the borrower cannot meet the requirements on reinstatement or Forbearance the lender may allow the borrower to catch up on what is owed by increasing the monthly payments until missed payments are brought current. This is a very favorable plan for many distressed homeowners.
• Loan Modification Plan- Some lenders may be willing to do one or all of the following.
• Modify a mortgage by converting it to a fixed rate mortgage as a lower interest rate and extending the years of the mortgage to reduce the monthly payments.
• Giving more years to pay off the mortgage and adding the missed payments to the balance of the mortgage.
• Forgiving part of the loan amount to make payments affordable.
• Deed In Lieu of Foreclosure- Sometimes referred to as ” Deed for Keys”. As with foreclosure, this plan does affect a person’s credit rating however, not as negatively as foreclosures. In order to enact this plan the loan amount must be lower than the anticipated sales price. Many lenders require a 20% differential to make this work.
• Cash for Keys- This plan works when there is equity in the property and the lender and the homeowner agree to exchange cash from the lender for the keys to the property. The borrower walks away with cash and the lender owns the property that has enough equity to cover the cost.
• Sell the Home- If the value of the property is greater than the loan amount it is a good possibility that the property could be sold. It is important to offer the property at a price that will attract many qualified buyers especially if real estate values are falling or if there are a considerable number of similar properties for sale in the area.
• Upside Down Properties- This refers to those properties in which the mortgage is greater than the value of the property. In this scenario the financial institution may be willing to forgive some of the mortgage to make a sale possible in order to avoid foreclosure. The amount of the mortgage that is forgiven is taxable and the mortgage company will send the borrower a 1099 form at the end of the year. Referred to as “Short Sales”, these transactions have become a preferred method of avoiding foreclosure. This process may result in a negative impact on the borrower’s credit rating though not as much as a foreclosure.
Comments(0)