What Are Your Options?
Reinstatement
When you are behind in your mortgage and the payments are brought current including any legal costs and penalties and you are permitted to make regular payments then your mortgage has been reinstated.
Forebearance or Re-Payment Plan
The literal meaning of forbearance is "holding back."
Loan borrowers sometimes have problems making payments. This may cause the lender to start the foreclosure process. To avoid foreclosure, the lender and the borrower can make an agreement called "forbearance". According to this agreement, the lender delays his right to exercise foreclosure if the borrower can catch up to his payment schedule in a certain time. This period and the payment plan depend on the details of the agreement that are accepted by both parties.
Forbearance is usually for temporary financial problems. If the borrower has more serious problems, for example if it is a variable-rate mortgage and the interest rate becomes unaffordable for the borrower, then forbearance is usually not a solution.
Sell The Property
If a buyer has equity in their property, they can sell it and use the funds from their equity to cure the foreclosure. Unfortunately, many sellers believe that they have to sell much faster than they do and end up taking the first offer that comes along.
Rent The Property
In some cases a homeowner facing foreclosure will have payments low enough to allow him or her to rent his or her property and keep up with his or her mortgage payments. This is however often a short termsolution since when taxes and insurance payments come due, many homeowners cannot afford them. This causes the mortgage company to enforce an escrow account on the property. This will cause the payments to go up and it is very possible that the homeowner will end up in the same situation they were in before they rented the property.
Refinance
If you have sufficient equity and income and your credit has not been too badly damaged, you may be able to refinance. This is also typically a short term solution since the payments on the property typically go up considerably due to the refinance.
Mortgage Modification
A modification to an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default.
Deed-in-Lieu of Foreclosure
A potential option taken by a mortgagor (a borrower) to avoid foreclosure under which the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith.
Bankruptcy
A bankruptcy may stop a foreclosure and allow you to reorganize your debt and keep your property. The reality however is that most of the time this is not the case and the bankruptcy only stalls the foreclosure. If you are not able to make the payments after bankruptcy the house will foreclose anyway.
The other major drawback to bankruptcy is that it makes it very difficult for you to sell your property once you enter the bankruptcy process. It makes it near impossible to negotiate a short sale. The only possibility is if the trustee for the bankruptcy agrees to release the property from the proceedings and allow it to be sold.
Servicemembers Civil Relief Act (SCRA)
MORTGAGES: The SCRA can also provide temporary relief from paying your mortgage. To obtain relief, a military member must show that their mortgage was entered into prior to beginning active duty, that the property was owned prior to entry into the military service, that the property is still owned by the military member, and the military service materially affects the member's ability to pay the mortgage. by -uscg.mil
It is important to note that this relief is only temporary and in many cases the most prudent course of action for a Servicemember, is to sell your home. This is a personal decision based on your specific financial situation.
Short Sale
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a you cannot pay the mortgage loan on your property, but the lender decides that selling the property at a loss is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrower.
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