9 Mortgage Relief Options - Alternatives to Foreclosure

Real Estate Agent with PacifiCal Realty Group - Keller Williams

As a certified Pre-Foreclosure Specialist, I have helped many homeowners tackle the challenging decision of how to manage their real estate investment, home, or other real property. Unfortunately, many San Diegan's find themselves owing more on their property then it is worth and/or finding themselves behind on their mortgage payments. To learn more about the options available to you to as a property owner, please continue to read or call me direct at 619-985-5805.

9 Mortgage Relief Options-Alternatives to Foreclosure

1. Forbearance - an agreement with the lender that temporarily allows the homeowner to pay less than the full amount of their mortgage payment, or perhaps even nothing at all during the "forbearance period". Lenders might consider forbearance when you can prove the them that funds from a bonus, tax refund, or other source will bring the homeowner's mortgage payments current at a specific date in the future.

2. Reinstatement - occurs when the homeowner pays the lender the total amount they are behind in a lump sum, by a specific time in the future. A reinstatement is often combined with forbearance.

3. Repayment plan - is an agreement with the lender that gives the homeowner a fixed amount of time to repay the amount they are behind. They do this by combining the home owners delinquent portion along with their regular monthly payment. At the end of the repayment period, the homeowner has paid back the delinquent mortgage and is now current.

4. Loan Modification - is a written agreement between the lender and the homeowner that more permanently changes one or more of the original terms of the note. This makes the payments more affordable. Common loan modifications include:

a. Adding missed payments on top of the existing payments

b. Turning an adjustable-rate mortgage into a fixed mortgage

c. Extending the number of years the homeowner has to repay the loan

5. Refinance - Refinancing requires income, credit, and equity to support a new mortgage or deed of trust. If you current income cannot pay your present mortgage, it may be difficult to convince another lender to offer you a loan with a reasonable interest rate. Based upon the more stringent standards of qualifying criteria for loan applications, refinancing in today's market is becoming less and less of a viable option.

6. Short Refinance - This is the latest trend for lenders in working with delinquent borrowers to avoid foreclosure. The lender agrees to refinance the home with a reduction in the principle balance. Sometimes the lender will also reduce the interest rate as well as on the new loan. The borrower needs to provide proof of "hardship" and fully document the ability to pay the new mortgage.

7. Bankruptcy - A bankruptcy may allow the homeowner to discharge some debt and reorganize others to keep the property, however, if homeowners do not or cannot make the house payment after the bankruptcy, the home is foreclosed on anyway.

8. Short Sale - If the sale proceeds are less than the total amount owed to the lender, the lender may agree to a short payoff or a "short sale" and write off the portion of the home owners mortgage that exceeds the net proceeds from the sale.

9. Deed-in-lieu of Foreclosure: If you cannot sell your home in a reasonable amount of time, your mortgage company may allow you to voluntarily transfer the deed to the property to the mortgage company

Individuals should review their specific situation with their tax adviser or legal professional (lawyer) for information regarding, or issues concerning, the tax, credit and legal implications of taking any specific position regarding their mortgage relief options. The persons and firm providing this information does not provide legal advice or advice on foreclosure avoidance. We are also not a foreclosure consultant.

Posted by


Jon Quist
Tucson's BUYERS ONLY Realtor since 1996

That is a good list, well thought out and should be helpful for more than a few owners, sad to say. Too bad it's Members Only. It would have been a great Re Blog candidate.

Jun 21, 2011 08:26 PM