Programs and Options

Short Sale

In a short sale if you are not able to use the options above and you cannot bring your loan current, afford to make the monthly payments, or sell the property for the full amount of the loan, your lender would have to agree to accept less than the amount owed as full payment.

The Positive:

Under the terms of a short sale you are protected by The Mortgage Debt Relief Act of 2007 and your lender may forgive your mortgage debt in its entirety according to the terms outlined in The Mortgage Debt Relief Act of 2007.  The waiting period to buy a home after a short sale could be less than 14 months compared to the 5-7 years following a foreclosure.

The Negative:

You must sell your home.

Deed-in-Lieu of Foreclosure

 A deed-in-lieu of foreclosure your lender would have to agree for you to voluntarily transfer the deed to the property to them.  This is typically done when you are unable to bring your loan current or sell your home in a reasonable amount of time.

The Positive:

By voluntarily agreeing to a deed-in-Lieu of foreclosure you would save your lender thousands of dollars by avoiding the foreclosure proceedings. If you and your bank are willing to do this, Fannie Mae has reduced the mandatory waiting period to establish credit history to a minimum of 4 years compared to the mandatory waiting period of 5-7 years following a foreclosure.

 The Negative:

You must move from your home.

 

 

Forbearance

If you and your lender agree to a forbearance, you will pay a reduce amount of your mortgage or your lender will suspend payments for a short amount of time. At the end of the forbearance period, you will make your regular mortgage payment plus an additional amount of the past due payments each month until you are caught up.

The Positive:

You will be able to remain in your home and with a temporary reduced monthly payment or a suspended payment.  This will give you the time to recover from injury or illness, save money, pay off other bills, and find employment or additional employment.

The Negative:

For a period of 1-year or more your mortgage payments could be up to20%-25% higher due to the past due amounts owed after the forbearance period.

Loan Modification

In a loan modification if you don’t have enough money to bring your account current but you can afford to continue making the original mortgage payments on your loan, your lender may be able to take your delinquent payments add them to your original loan and make the monthly payment more affordable. The way that the lender may permanently changed your loan is by lowering the interest rate, making an adjustable rate fixed, adding the missed payments to the back end of the existing loan balance, or they may choose to extending the number of years you have to repay your loan.

The Positive:

You will be able to remain in your home.

The Negative:

Most people do not qualify for a loan modification because of additional debt such as credit cards, car payments, medical bills, and student loans.   Another problem people are running into is that their home has depreciated in value or they purchased their home with little or no money down.