My Country Walk Blog

Alternatives to Foreclosure

So, your house is in foreclosure… now what?!? Georgia has one of the highest foreclosure rates in the country and homes in Country Walk are no exception.  Try to look at the situation without attaching your emotions. If viewing the situation from a strictly business viewpoint, you can more successfully analyze which option might best suit your needs and desires and move you towards resolving your financial difficulty. One very important thing to remember: Time is of the essence, so sit and take serious thought of your situation and take quick action in order to allow yourself enough time to complete the chosen process.

Nine options when facing Foreclosure

1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option. The Sheriff or Marshall will certainly show up one day and give you from 20-30 minutes to gather what belongings you can carry and vacate the premises. There is no dignity in this scenario.

2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home. With the recent foreclsoure prevention initiatives passed by congress, this may be more of an option than you might think.

3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required by the lender to show that you are able to meet the new payment plan requirements. You must show you can recover from the hardship.

6. Partial Claim – A loan from the lender for a 2^nd loan to include back payments, costs and fees. Credit must be hugh enough to qualify.

7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks require the home be well maintained, all mortgage payment and taxes must be current. The home must be listed at fair market value for at least 90 days with no offers before this option may be exercised. Most loan applications ask if this has ever happened.

8. Bankruptcy – This option can liquidate debt and/or allow more time. Be sure to consider if this is an actual solution or are you just buying time to avoid the inevitable?

–Chapter 7 (Liquidation) To completely settle personal debt.

–Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.

–Chapter 11 (Business Reorganization) A business debt solution.

9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale.

On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by an experienced Real Estate Professional if what is owed is MORE than the property’s current value.

*Make sure that your real estate professional has experience and training regarding the short sale process and do not pay any huge upfront fees for home retention services.

If you sell the home your credit record may simply reflect that you had some late payments and now you have a $0 balance.  It will be much easier to re-establish credit and obtain a mortgage in the future.

 The bottom line is this - Communicate with your lender! They do not want your house.  Some lender also contract with home retention specialists to communicate with the home owner.  If you are contacted be sure to comminicate.  The job of the home retention specialistis to help you avoid foreclosure - they are collection agents.

 If you need help please be sure to ask for it.  Do not ignore the situation.

 In addition to being a REALTOR(R), I am a Home Retention Specialist with Titanium Solutions.  I have successfully negotiated several short sales (including the home that I am living in) and helped several home owners re instate their mortgage and keep their homes.

Please fell free to contact me if I can help.  770-656-9134 or countrywalk@AgentBobSells.com

Country Walk subdivision is located in Powder Springs, Georgia, 30127.  To view Country Walk homes for sale visit  www.MyCountryWalkHome.info