1. Sell House: Sell house before or during foreclosure process. Most likely sell by using a Short Sale. In a short sale, the current market value of the property is less than the amount owed to the lender(s). The lender(s) must agree to accept less than the amount owed, in order for the transaction to close. Due to current market condition and lenders NOT wanting to own property, this is becoming a common type of Real Estate transaction.
2. Re-Instatement: Must be done before property is auctioned at Sheriff's sale. Must bring mortgage current, make up all missed payments, interest, penalties and legal fees. Will only work if problem has been resolved and can make future monthly payments on time. If this is an option, find money, borrow from family, sell assets, boat, car, 401k, etc..
3. Redemption: Typically a six month period after Sheriff sale. Entire mortgage balance, interest, legal fees, penalties must be paid before redemption period runs out.
4. Loan Modification: Reduced monthly payment. Must be working. Typically will get a response in 30-60 working days stating whether they qualify for loan modification.
5. Deed in Lieu of Foreclosure: Grant property to bank, in exchange they will foreclose on the property. Banks do not want to own property, especially if the house is upside down. This solution only works in cases where there is only one mortgage and no other liens on the property. Will have the same damaging effect on credit as a foreclosure.
6. File Bankruptcy: May stall foreclosure process, cannot make foreclosure disappear. Lender will eventually remove the home from bankruptcy and start foreclosure process. May possibly work, if mortgage is current or prior to auction sale and have money to bring loan current. Owner could have unsecured debt, like credit card payments forgiven, but still must be financially able to make mortgage payments. Due to changes in Bankruptcy laws and unique individual situation, the homeowner must consult with an Attorney. The one thing many homeowners do, which is the worst choice of all: NOTHING!
Alan Stalter
Elite REO Services
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