FORECLOSURE IS NOT THE ONLY OPTION!

Are you or a loved one behind on mortgage payments? Have you received a foreclosure warning from your mortgage holder? This can be a devastating time in any homeowners life. There are tons of different situations that can lead to defaulted payments for instance: losing your job, disability, divorce, lost of a family member etc. Try not to panic because I am here to to inform you that there are several options available to you to avoid going into foreclosure and to limit putting a dramatic tole on your credit rating.

What is foreclosure?

Foreclosure takes place when the home owner has failed to make their mortgage payments. A mortgage default gives the mortgage holder (lender) legal right to gain ownership of the property. The mortgage holder (lender) has the ability to sell the property and use the funds to pay off the balance of the initial mortgage.

There are two main types of foreclosure:

1. Foreclosure by judicial sale: This is the process when the mortgage holder proceeds to sell the borrowers (homeowner’s) under the supervision of a court due to the homeowner’s failure to comply with the mortgage agreement to make their monthly payments in a timely manner. This agreement is signed by both parties before purchasing the home. The proceeds from the sale of the home first goes to paying off the balance of the  defaulted mortgage then lastly to the mortgagor (typically the homeowner) if there is any funds left. Since legal action is taken place all parties must be informed of the foreclosure. A judicial decision is usually made after a short trail. This type of foreclosure is most common within majority of the states.
2. Foreclosure by power sale: This is the process when the borrower (homeowner) fails to make monthly payments on the mortgage and the mortgage holder (lender) has the ability to initiate the right to sell/auction the property with out involving the court. The terms are typically stated within the contract/agreement that both parties sign upon purchase of the property. This process tends to be much faster since a judicial decision is not needed from the courts. This type of foreclosure is limited to certain states.

There are other types of foreclosures available in different states. It is best to speak with an attorney to determine the type of foreclosure you can potentially face, an attorney can provide you with legal advice and help you stay clear of scammers (people who prey on individuals during their financial unsuitability). Click here for a Lawyers Directory

….But wait there is hope!

Most homeowners are not aware that mortgage holders (Lenders) do not want homeowners to go into foreclosure because they end up losing money instead of gaining. Mortgage holders will always prefer an alternate option if the problem is caught early on.

Step 1: First and best advice- Do not avoid you mortgage holder notices. These are extremely important and they are trying to give you chance before it is too late. Be sure to contact your mortgage lender at the first sight of financial problem to see what alternatives that can provide you with.

Step 2: Know your rights –Be sure to keep your mortgage documents in a safe place. Now is a time you will need them more than ever. Read over the document to re-educate yourself of yourself of the terms that you agreed to when signing the contract. It will state the actions the mortgage holder will take if you are defaulted on your loan.

Step 3: Understanding that there are options to avoid foreclosure- President Obama has created the Obama administration which has implemented several programs for homeowners facing foreclosure or at risk. These programs are are administered through the U.S. Treasury Department and HUD. Below are options that they offer.

LOAN MODIFICATION

Modify or refinance your loan: Your mortgage holder may be open to modifying your loan. This can mean lowering the interest rate or extending the time that the loan is amortized over (this can lower your monthly payments dramatically).

1. Making homes affordable program (MHA): This program was created as a way help homeowners avoid foreclosure and stabilize the country’s market. Homeowners who are eligible will be able to lower their monthly mortgage payments.
2. Home Affordable Modification Program (HAMP): HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more. .
3. Principal Reduction Alternative (PRA): PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home. Click here for more information.
4. Second Lien Modification Program (2MP): If your first mortgage was permanently modified under HAMP SM and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage under 2MP. Likewise, If you have a home equity loan, HELOC, or some other second lien that is making it difficult for you to keep up with your mortgage payments, learn more about this MHA program.
5. Home Affordable Refinance Program (HARP): If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage.

Homeowners that have experienced a decrease in their homes value, there is help for you as well.

Underwater mortgage: This happen when the balance of the mortgage loan is higher than the fair market value of the home.

1. The PRA and HARP from above can potentially assist with this mortgage problem.
2. Treasury/FHA Second Lien Program (FHA2LP): If you have a second mortgage and the mortgage servicer of your first mortgage agrees to participate in FHA Short Refinance, you may qualify to have your second mortgage on the same home reduced or eliminated through FHA2LP. If the servicer of your second mortgage agrees to participate, the total amount of your mortgage debt after the refinance cannot exceed 115% of your home’s current value.

Assistance for Unemployed Homeowners

1. Home Affordable Unemployment Program (UP): If you are having a tough time making your mortgage payments because you are unemployed, you may be eligible for UP. UP provides a temporary reduction or suspension of mortgage payments for at least twelve months while you seek re-employment. Click Here for more information.
2. Emergency Homeowners’ Loan Program (EHLP): Click Here for more information about EHLP assistance provided in your state.
3. FHA Special Forbearance: If you are having difficulty making mortgage payments because you are unemployed and have no other sources of income, you may be eligible for FHA’s Special Forbearance. FHA now requires servicers to extend the forbearance period, by offering a reduced or suspended mortgage payment for up to twelve months, for FHA borrowers who qualify for the program. Click Here for more information.

For application/requirements/additional information please click here! 

Short sales

Short sales have become one of the most popular alternative to foreclosure. Majority of mortgage holders will allow you to sell the home for a lesser price than what is owed. The reason for this is because it typically is a quicker process then going through foreclosure (which allows banks to not have to carry out a foreclosure on their books of liabilities), mortgage holders tend to lose less money. Homeowners have a win in  this situation as well because the impact on their credit rating is far less hurtful than a foreclosure. Homeowners typically can buy a new home within 2-3 years after the initial short sale! Isn’t that awesome.

If you are considering the option of short sale, it’s critical to work with a trained real estate agent like myself  who knows all the steps required to successfully complete a Short Sale. You should not hesitate to talk to me even if you have negative equity. I am here to help you stop foreclosure and sell your house within the shortest time possible. Talk to me as soon as possible. The more you continue to wait, the worse the situation becomes. Act now, Click here to contact me so I can put an END to your foreclosure misery!

-Raquell