Potential Options for Loans in Default or Pre-Foreclosure:
- Reinstatement of Loan – Bringing the loan current by paying missed payments and late fees.
- Forbearance Plan – This is a temporary agreement intended to assist a homeowner or military member in keeping their loan current. Agreements may include extending the term of the loan or adding monthly payments to the end of the loan term.
- Temporary Indulgence - A grace period may be granted by the lender (usually a 30 to 60 day pause) allowing the borrower to bring the mortgage current. Indulegence is considered when a contract for sale with a close date can be verifed or there is pending confirmation of funding such as a refinance.
- Loan Modification – This option is a permanent alteration to the loan account that would bring the loan current. While often very desirable for the homeowner, it can typically require an extensive review by the mortgage lender and approval can be more difficult to obtain than in other settlement solutions.
- Partial Claims - For FHA borrowers only, with this modification the lender breaks the loan into two separate loans. The borrower makes their monthly payment with interest on the first loan and the second loan (consisting of the past due, missed payments) can be deferred on a "partial claim" which does require monthly payments and does not carry interest. The Partial Claim is a lien and is paid when the borrower sells or refinances the home.
- Short Sale – This option is when a lender allows you to sell your home for less than what is owed on the mortgage balance. Typically, that means the lender will be taking a loss and they will not permit the seller to receive any proceeds from the sale. While credit scores may drop after missing mortgage payments, a short sale keeps a foreclosure from being reported to the mortgage holder’s credit report.
- Deed in Lieu of Foreclosure– When the homeowner signs the deed to give the property back to the mortgage lien holder. The ability to conduct a deed in lieu is dependent upon many factors and would need approval of the lender.
These are options which may help homeowners who are in distress or are facing a financial hardship. If you are behind on your mortgage or facing foreclosure, time is of the essense. Please fill out the contact form, call or text Jennifer today at 330-573-1541.
The above is for informational purposes only and is not intended as legal advice. These are options that some lenders may allow and are not guaranteed.