5 Foreclosure Assistance Strategies to Prevent the Process
In case you have been served with a Notice of default or NOD, or have missed a series of mortgage payments, you might be on the brink of losing your home. However, don’t lose hope; there’s always a way out. You can follow these foreclosure assistance strategies and stop the process that so far seemed inevitable.
Short Sale
Your lender can consider any offer you received after the submission of NOD before the auction. A foreclosure for the lender simply means turning it around and attempting to resell it. However, with a reasonable short sale offer, they will find it more suitable to save time, effort, and trouble to find a preferable buyer in a market where the number of buyers is not so high. As long as your home is on the market, don’t give up on finding the right candidate (buyer); this is applicable even if your lender has initiated the foreclosure process.
Foreclosure Workout
Before your home is up for auction, your lender will primarily try to work a way out to give you a chance. They would prefer to see you back on your feet, rather than just putting your home for foreclosure right away.
Bankruptcy
By the provision of federal law any kind of debt collection will be strictly prohibited, once you filed for bankruptcy. Foreclosure is all about debt collection activities; so as soon as you filed a petition for bankruptcy, the entire process will come to a halt.
Bankruptcy is nothing but a way to buy more time to get back on your feet or, in other words, recover your financial health. The law expects your lender and you to mediate a way toward a more reasonable repayment plan. But, instead of making an arbitrary decision on your own, it would always be a better choice to consult with an attorney, to know whether you should file for one or not.
Lease-Option or Assumption
Today there is nothing called an assumable loan. On every mortgage, today, there’s a “due on sale” clause, in which they agree to entirely pay the loan during the transfer of property. Nevertheless, in case of a foreclosure, you have the option to request your lender for a loan modification, delete a particular clause, or allow someone else to assume the loan. Although the lender is likely to verify the new buyer’s eligibility, at the end of the day, everyone can be better off. Try negotiating a down payment with the new buyer, to pay off your all outstanding dues on mortgage.
A lease-option ultimately turns the buyer into your tenant, and you enjoy the right over the property to the fullest until the buyer managed enough for the down payment, or improved credit rating. A successful lease-option means you negotiate lease payments that cover your insurance obligations, entire mortgage payment, and property tax. This will enable you to live somewhere else while handling everything related to the mortgage without any interruption.
Deed in Lieu
In a deed in lieu you, as a homeowner, voluntarily sign the deed to handover the home to the bank. Though it might sound like a better alternative, but it has the exact impact as in the case of a foreclosure.
For a number of reasons, lenders are not very willing to take back the home through a deed in lieu. Because, in such a case the homeowner preserves the right to sue the lender, or the lender may have to pay any home equity lines of credit (HELOCs) or secondary mortgage. Moreover, the lender wants to be rest assured that the home owner’s financial disruptions are for real. By allowing the foreclosure process to proceed, the lender gets the guarantee that the borrower is not lying about his financial difficulties.