A financial downturn can
occur to anyone at anytime.
If you are in financial
trouble and cannot make
your mortgage payments
you have options. There is
foreclosure help and you do
not have to lose your home.
The good news is that
lenders do not want your
home. If you are facing
foreclosure act now and
stop foreclosure by asking
your lender about the
following options:
occur to anyone at anytime.
If you are in financial
trouble and cannot make
your mortgage payments
you have options. There is
foreclosure help and you do
not have to lose your home.
The good news is that
lenders do not want your
home. If you are facing
foreclosure act now and
stop foreclosure by asking
your lender about the
following options:
Foreclosure Help - Options to
avoid foreclosure: You Do Not
Have to Lose Your Home
by Lisa Phillips
www.rebuildcreditscores.com
avoid foreclosure: You Do Not
Have to Lose Your Home
by Lisa Phillips
www.rebuildcreditscores.com
Loan Modification
A loan modification permanently changes the terms of the original note.
Mortgage loan modification may include decreasing interest rate, re-
amortizing the remaining balance, or extending the term of the loan. Loan
modification is also referred to as a workout or restructure. One of the
biggest advantages of loan modification over other foreclosure options is
that the interest rate can be modified to lower your monthly payment to one
that you can better afford.
You will probably have to request this option as lenders do not like lowering
interest rates because it affects their profits. Another advantage of
mortgage loan modification is that it stops late payment reporting to the
credit reporting agencies. It gives you a new start much like a refinance.
You may qualify if you have recovered from a financial setback. When
requesting a loan modification you will be required to provide financial
documentation along with a hardship letter stating the cause of your short-
term financial difficulties. The hardship letter may include unexpected
medical expenses or loss of income and also how those circumstances
have now changed, such as a new form income, etc.
Forbearance
Forbearance is an agreement between the borrower and lender that
reinstates the delinquent loan through the payment of a lump sum or a
schedule of payments over a period of time, usually no more than 12
months. The lender may add the amount in arrears to the mortgage
payment for a short period of time until the amount in arrears is brought
current.
Depending on the circumstances, the lender may allow you to negotiate a
temporary suspension of your mortgage payments, setting aside any
payments in arrears or; the lender, may allow a reduction in the amount of
your mortgage payment. As with loan modification you may need to prove
that whatever caused your financial difficulty is short term and that you are
now able to make timely payments. The drawback of forbearance is that it
does not preserve your credit. Your mortgage payments will continue to be
reported as “paid late” until you bring current your total amount in arrears.
Partial Claim
Your lender may be able to work with you to obtain a one-time payment
from the FHA-Insurance fund to bring your mortgage current. Your loan
must be FHA insured.
Qualifications:
When your lender files a Partial Claim, the U.S. Department of Housing and
Urban Development will pay your lender the amount necessary to bring
your mortgage current. You must execute a Promissory Note, and a Lien
will be placed on your property until the Promissory Note is paid in full. The
Promissory Note is interest-free and is due when you pay off the first
mortgage or when you sell the property.
Short Sale
The lender allows you to sell the house for less than the outstanding loan
amount, takes the proceeds and forgives any remaining debt. Your credit
will not reflect a foreclosure.
Short Refinance
The lender forgives some of your debt and refinances the rest into a new
loan.
Hard Money Loan
Refinance with a "hard money" loan. The interest rates and fees are
extremely high and usually involve a private lender. Normally a short term
solution to buy you time to sell your home or find more favorable
refinancing terms while avoiding foreclosure. See Hard money loans
Mortgage Insurance Claim
Your lender may be able to work with you to obtain a one-time loan from
your mortgage insurance fund to bring your mortgage current. You would
be required to pay back this loan to the insurance company over time.
Deed-in-Lieu of Foreclosure
As a last resort, you may be able to voluntarily "give back" your property to
the lender. You won’t be able to stay in your home, but it is not as
damaging to your credit rating as a foreclosure. This option is only
available if there are no other liens or judgments on the property.
A loan modification permanently changes the terms of the original note.
Mortgage loan modification may include decreasing interest rate, re-
amortizing the remaining balance, or extending the term of the loan. Loan
modification is also referred to as a workout or restructure. One of the
biggest advantages of loan modification over other foreclosure options is
that the interest rate can be modified to lower your monthly payment to one
that you can better afford.
You will probably have to request this option as lenders do not like lowering
interest rates because it affects their profits. Another advantage of
mortgage loan modification is that it stops late payment reporting to the
credit reporting agencies. It gives you a new start much like a refinance.
You may qualify if you have recovered from a financial setback. When
requesting a loan modification you will be required to provide financial
documentation along with a hardship letter stating the cause of your short-
term financial difficulties. The hardship letter may include unexpected
medical expenses or loss of income and also how those circumstances
have now changed, such as a new form income, etc.
Forbearance
Forbearance is an agreement between the borrower and lender that
reinstates the delinquent loan through the payment of a lump sum or a
schedule of payments over a period of time, usually no more than 12
months. The lender may add the amount in arrears to the mortgage
payment for a short period of time until the amount in arrears is brought
current.
Depending on the circumstances, the lender may allow you to negotiate a
temporary suspension of your mortgage payments, setting aside any
payments in arrears or; the lender, may allow a reduction in the amount of
your mortgage payment. As with loan modification you may need to prove
that whatever caused your financial difficulty is short term and that you are
now able to make timely payments. The drawback of forbearance is that it
does not preserve your credit. Your mortgage payments will continue to be
reported as “paid late” until you bring current your total amount in arrears.
Partial Claim
Your lender may be able to work with you to obtain a one-time payment
from the FHA-Insurance fund to bring your mortgage current. Your loan
must be FHA insured.
Qualifications:
- Your loan is at least 4 months delinquent but no more than 12
months delinquent; - You are able to begin making full mortgage payments.
When your lender files a Partial Claim, the U.S. Department of Housing and
Urban Development will pay your lender the amount necessary to bring
your mortgage current. You must execute a Promissory Note, and a Lien
will be placed on your property until the Promissory Note is paid in full. The
Promissory Note is interest-free and is due when you pay off the first
mortgage or when you sell the property.
Short Sale
The lender allows you to sell the house for less than the outstanding loan
amount, takes the proceeds and forgives any remaining debt. Your credit
will not reflect a foreclosure.
Short Refinance
The lender forgives some of your debt and refinances the rest into a new
loan.
Hard Money Loan
Refinance with a "hard money" loan. The interest rates and fees are
extremely high and usually involve a private lender. Normally a short term
solution to buy you time to sell your home or find more favorable
refinancing terms while avoiding foreclosure. See Hard money loans
Mortgage Insurance Claim
Your lender may be able to work with you to obtain a one-time loan from
your mortgage insurance fund to bring your mortgage current. You would
be required to pay back this loan to the insurance company over time.
Deed-in-Lieu of Foreclosure
As a last resort, you may be able to voluntarily "give back" your property to
the lender. You won’t be able to stay in your home, but it is not as
damaging to your credit rating as a foreclosure. This option is only
available if there are no other liens or judgments on the property.
In today's market, foreclosures are on the rise. We see reports in the news
daily about the rising rates of foreclosures across the country. Many industry
experts put the blame on “subprime” lending but now we are seeing people
with “prime” lending loans also facing foreclosure.
daily about the rising rates of foreclosures across the country. Many industry
experts put the blame on “subprime” lending but now we are seeing people
with “prime” lending loans also facing foreclosure.
| Copyright RebuildCreditScores 2008. All Rights Reserved |
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