Mortgage Problems- Understanding Your 15 Options (Part 1)

When you first perceive future mortgage problems, you have 15 options. As your lender passes further and further through the necessary steps to foreclose on your property, your options become fewer and fewer. It is imperative you act quickly!     If you stand idle, the foreclosure is rarely the end of the situation!

• You may still owe money tied to the property they took.
• You may still have tax liabilities tied to the property they took.
• You may have ruined credit for 8-13 years instead of 2-5 years.

YOU MUST BE PRO-ACTIVE TO PROTECT YOUR INTRESTS! When you first perceive future mortgage problems, you have 15 options.

1. Refinance- The advantage to this option is that you would get to stay in the home. However, this option of course requires equity and good credit. If your home is not worth more than you owe, or your mortgage payment is late this is not an option. IF you have equity, refinance. Usually the lender would refinance the existing loan and include as part of the new loan any late payments, and fees that you would need to regain control. It would all be "wrapped" into one mortgage.
2. FHA Secure Refinance- The requirements are not as strict as a regular refi, and the rates are great. Programs are changing.
3. Rate Modification- Rate modification is when the lender agrees to change the terms of your loan to something that will work for the both of you. Rate modification requirements vary by lender. Call your lender and ask about it. It is important to fill out whatever paperwork they give you exactly as they require.
4. Mortgage Modification - The lender can modify your mortgage to extend the length of your loan (or take other steps to reduce your payments). One solution is to add the past due amount into your existing loan, financing it over a long term.
5. Deed in lieu- The lender can allow you to give-back your property and then forgive the debt. If there are no other liens on the title, the lender may agree to take the property back. This process of transferring ownership from you to the lender under these circumstances is called a Deed in Lieu of Foreclosure, and is sometimes referred to as a "friendly foreclosure" because in essence that what it is. You just walk away (with lender approval, of course).

 

You must discuss this with your lender. Give-backs do, however, have a negative impact on your credit record, although not as much as a foreclosure, but generally more than a Short Sale. The lender will require that you first attempt to sell the house for at least 60 days with a REALTOR (see #14).

Continued on Wednesday, December 28, 2011

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