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10 Alternatives to Foreclosure

By
Real Estate Agent with Steinborn & Associates Real Estate

Stop ForeclosureToday we want to pick up the conversation with some alternatives to foreclosure. This list is just part of our overall Foreclosure Resources that are available for free on our website

Other Alternatives to Foreclosure

Short Sale

If you owe more on your property than it is currently worth, by negotiation with your lender you can sell the property for a price less than you owe and consider this as satisfying your debt. This a common solution.The Short Sale Process

Government Home Owner Assistance Programs

The rising number of foreclosures in this country is simply too big to ignore. That is why a number of government-backed program have been created that aim to streamline foreclosure avoidance options.Available Government Programs

Reinstatement

A reinstatement is the simplest solution for a foreclosure, but often the most difficult to achieve. The homeowner simply pays the total amount past due (including late fees) to the lender.

Mortgage Modification

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 combination of these.

Deed-in-Lieu

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.

Forbearance

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.

Rent the Property

This option does not require lender approval, but does require the homeowner's ability to rent the house for enough money to cover the monthly mortgage payment.

Servicemembers Civil Relief Act

If a member of the military experiences financial distress due to deployment-and their debt was entered into prior to deployment-he or she may qualify for relief under the Servicemembers Civil Relief Act.

Bankruptcy

Many believe bankruptcy is a "foreclosure solution," but this is only true in some states and situations. Entering bankruptcy can be a risky and costly process. Be sure to seek the advice of a qualified bankruptcy attorney when pursuing this as an option.

Refinance

Refinancing means you will acquire a new loan based on your current credit standing. If you have already missed mortgage payments, your credit score may make it difficult to find a loan with cheaper payments. Knowing that foreclosure can be avoided gives you the ability to develop a realistic strategy to plan for a future that is both financially stable and full of hope

The Homebuyers Toolkit

Cindy Keil
Cindy Keil Coaching - Omaha, NE
CEO Cindy Keil Coaching

Thanks for the article! I recommend adding the Shortsale alternative to the list.

Feb 22, 2013 12:28 AM
Michael Ford
San Diego, CA
California+Hawaii+Oregon

evelyn,

i went and had a look at info you provide to your clients...powerful stuff and very well presented.  can you share with us how you get the clients to really digest the info and take action?   i can see how if you can get them to read and understand it they'd be in a position of knowledge. 

the biggest problem i encounter is...how do we get them to take action?

Feb 22, 2013 12:29 AM
Susan Jackson
America's Network Realty Group, Inc - Sandy Springs, GA

Simply put, great.  Would add short sale to the list.

Feb 22, 2013 12:46 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Bankruptcy can help you to get a fresh start with the mortgage.  It does not relieve the debt.

Feb 22, 2013 01:04 AM
S W
Centerville, KS

Great post and very simple to understand. I am sure some homeowners in distress with appreciate this!

Feb 22, 2013 01:29 AM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker
If the owners are way underwater, it may make sense to them to try an option to leave the house. If its a temporary problem with payments, the other options should be pursued. My suggestion is to get advice from an attorney and tax accountant before taking a drastic step. This may have consequences that may even make it impossible to get a job or rent.
Feb 22, 2013 02:27 AM
Dave Leiderman
Keller Williams Realty of Delmarva - Ocean City, MD
ABR, SRS, SFR - Realtor - DE & MD Beaches

A great post indeed Evelyn.

I wish there was something more that could be done to curtail the rising inventory of foreclosures in this country.  While there are government initiatives the bottom line seems to be that "they" can't force the banks to change policy or reduce the interest rates to their borrowers.  Then when you consider the number of illegal foreclosures or unethical policies undertaken by the banks this is a problem of seismic proportions.

Feb 22, 2013 03:02 AM
Annett T. Block
NextHome Connect Realty - Fort Lauderdale, FL
Your NextHome in Fort Lauderdale Beach

Great Post Evely. Right on spot. Sadly not to many homeowners take the chance they have with one of those options. Many still let it go to the foreclosure porcess and don't know about there options.

Feb 22, 2013 04:42 AM
Jeri Herl
Keller Williams Realty Centre - Eldersburg, MD
CDPE, CLHMS, GRI

Great post. Short sales will be with us for awhile and we need to reach out to homeowners who are underwater and facing foreclosure with all their options.

Feb 22, 2013 05:23 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Great post giving sellers all their options available to them.  I'm not sure why you said BK is 'risky' - it's pretty straight forward & you should always seek counsel to do it correctly as timing is everything.

Feb 22, 2013 05:59 AM
Wayne Zuhl
Remax First Realty II - Cranford, NJ
The Last Name You'll Ever Need in Real Estate

Great post  - lots of underwater homeowners are thanking you right now :)

Feb 22, 2013 06:08 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Nice explanation for consumers....I think that many of these options are unknown to the public. Good job educating them. 

Feb 22, 2013 07:02 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

Good post with lots of suggestions hopefully the word will get out and help the folks

Feb 22, 2013 01:40 PM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

Regardless of the options, most distressed homeowners don't take any action for a remedy until there aren't any options left. I'm amazed and don't understand why most homeowners don't consult with a professional for assistance to explore their options and find a suitable solution after discovering their challenge. Hopefully, your options list will encourage them to seek help from professionals immediately.

Feb 22, 2013 03:04 PM
Curt Harrington
Long Beach, CA

Primo article.  Top for Active Rain.

 

Someone should do a mega check list with variations.

 

Curt Harrington
Certified Tax Specialist -- State Bar of California Board of Legal Specialization
Electrical-Chemical-Mechanical Patent (Intellectual Property) Attorney
(562) 594-9784
PATENTAX_dot_COM

Feb 22, 2013 03:26 PM
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide
Evelyn-Great post and agree with some comments that mention many do not take action until late in the game.
Feb 22, 2013 03:39 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Unfortunately, too many homeowners are too embarrassed to say anything until it's too late.

Feb 22, 2013 09:45 PM
Steve Vondran "Attorney SteveĀ®
The Law Offices of Steven C. Vondran, P.C. - San Francisco, CA
Business, Real Estate, and Intellectual Property

Great article!!

Feb 23, 2013 07:21 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Evelyn, great post and excelent review and summary!

Feb 25, 2013 04:43 AM
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

Great list, and well explained.  There are certainly a lot of options for owners in distress, if they will just reach out to a professional for help.  Good job!

May 02, 2013 06:10 AM