Alternatives to Foreclosure

For homeowners faced with foreclosure, a number of factors will influence their decision and options when it comes to avoiding foreclosure.  First, homeowners can take one of two approaches, which include pursuing options to retain the ownership of a home, or secondly, following through with the sale of a home with the intentions of retaining as much revenue as possible from these sales, while satisfying outstanding mortgage obligations. 

Deciding to Sell Your Home in Light of Foreclosure

For some homeowners, the foreclosure proceedings they face are not worth the hassle.  In some instances, the mortgage debt obligations, after careful consideration, are too large to overcome and foreclosure is seemingly inevitable.  In these cases, homeowners will likely move to options and strategies that will allow them to retain as much value from their existing home, which will be placed in finding a new dwelling space.  In two most common types of foreclosure proceedings across the United States, either the courts or the lenders themselves will sell the foreclosed home or property in a judicial sale, which most likely will return homeowners much less revenue than the actual value of their home.  Once the decision to leave a home has been made, homeowners have several options to maximize the value and benefits of selling their home in light of foreclosure including:

  • Deed in lieu of foreclosure, which essentially allows homeowners to give back their home to mortgage lenders in the event of inability to make payments
  • Assumption, which allows another individual to assume the mortgage obligations of your home, as well as the ownership
  • Private party sale of the home, which could potentially allow homeowners to cover their outstanding mortgage debts and have enough revenue left over to find a new home
  • Pre-Foreclosure sale of the home, which allows the sale of a home to occur, but may or may not engender homeowners with enough revenue to cover all of the outstanding foreclosure debts

All of the aforementioned options are heavily dependant on the terms and conditions homeowners set forth in the mortgage agreements with lenders initially.  A real estate attorney can help clients decipher these contracts and outline the potential options available to homeowners and their individual mortgage situations. 

 

 

Alternatives to Keep Your Home in Light of Foreclosure

Many homeowners wish to retain their homes, and even in light of financial shortcomings, are willing to explore other options that will allow them to remain in their current home.  Likewise, the ability and potential for homeowners in foreclosure to pursue these options is highly dependant on a litany of factors including state laws, their relationship with lenders, the timeline of the mortgage and foreclosure, and the agreements set forth in mortgage lending agreements.  Some potential alternatives to foreclosure homeowners should look into include:

  • Refinancing Mortgage Loans, which if there is sufficient equity in a home, will allow homeowners to take on a new loan with more manageable terms
  • Mortgage Loan Modification, which allows the terms of an outstanding mortgage agreement to be amended to allow more manageable repayment for homeowners wishing to retain ownership of their property
  • Forbearance Options, which allows the repayments required to cease for a period of time, which must be repaid at a later date.
  • Repayment Plans with Lenders, which allows a homeowner and lender to work together in preparing a payment strategy that allows homeowners to keep their home and still make manageable payments
  • HUD Partial Claim, which if a loan is insured by the Federal Housing Administration, allows the FHA to make a one-time payment to bring delinquent mortgage debts current for homeowners
  • Individual State Assistance Programs, which in light of foreclosure pandemic in America, have been initiated at the state level to assistance struggling state residents retain their homes and work through their financial crisis

If you are falling behind on your mortgage payments, you may still have some options to keep your home. The first and most important thing to do is contact and maintain correspondence with your lender, and avoid any company that approaches you about saving your home, as there are many foreclosure scams out there that will do more damage than good.

 

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