More Options for Preventing Foreclosure

In an earlier post, I recommended contacting the loan holder to renegotiate the loan as one way to avoid defaulting on a mortgage. Since writing the post, I noticed there were a number of articles on avoiding foreclosures. They all included talking to the lender to discuss loan payment options as the first course of action. Surprisingly, I learned over half of the borrowers who face foreclosure never talk to their lender.

In addition, I learned that there are other options besides renegotiating the mortgage. For those people that have a temporary issue, the options include:

Forbearance—Payments are delayed for a short period, with the understanding that another option will be used afterwards to bring the account current.

Reinstatement—You are behind in your payments but can promise a lump sum to bring payments current by a specific date.

A Repayment Plan—The lender agrees to let you catch up by adding a portion of the past due amount to each current monthly payment until your account is current.

Modifying Your Mortgage—The lender can modify your mortgage to extend the length of your loan or take other steps to reduce your payments.

For those that have a longer term issue, the options include:

Selling Your Home— The lender agrees to put foreclosure on hold to give you some time to attempt to sell your home.

Property Give-Back—The lender allows you to give-back your property and then forgives the debt. Give-backs do, however, have a negative impact on your credit record, although not as much as a foreclosure.

Source: How to Avoid Foreclosure and Protect Home Equity

This is not financial or mortgage advice. Please consult a professional advisor.

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