Many homeowners have become overwhelmed by their mortgage payments and have fallen behind or are in imminent danger of defaulting on their loan. This can be due to various reasons ranging from a loss of employment, reduction in income, to an adjustment of the terms of the mortgage raising the amount due. It is important to act quickly to avoid any potential long-term damage to one’s credit. Depending upon the individual homeowner’s situation, many options are available, such as:
A homeowner who wishes to stay in their home may qualify for a mortgage modification that can act to change the terms of the mortgage and arrange for a more manageable payment. The modification works by: setting a more favorable and affordable interest rate, forgiving principal, capitalizing past-due amounts, and/or extending the payment period. If you are considering asking for a loan modification contact us to schedule a free consultation. Many options are available that are designed to help people keep their homes. The modification procedure can be lengthy and frustrating but, the J.E. Baver Law Group has the experience to help you work with your lender to navigate through your options and find the best solution for you to keep your home and avoid foreclosure.
Some homeowners find themselves in a position where their overall debt is far too great and they now need to gain control of all of their finances including their mortgage. If it appears that financial recovery is not possible individuals may choose to file for bankruptcy. For example, Chapter 13 bankruptcy will encompass all types of creditors’ claims by organizing repayment and debt amounts. Repayment plans allow homeowners to get caught up on their mortgage payments and other debt in one proceeding.
Generally speaking, a short sale occurs when a homeowner arranges with their mortgage lender to accept a home sale that is less than the amount that is owed on the property and the lender agrees to forgive the remainder of the loan. In these cases, the homeowner avoids foreclosure. To do this, most creditors require the borrower to prove they have an economic or financial hardship preventing them from being able to pay the deficiency.
Deed in Lieu of Foreclosure.
This refers to instances where a homeowner conveys their interest in the property to the lender to satisfy a defaulted to avoid foreclosure proceedings. This allows the homeowner to be released from the remaining defaulted loan, avoids the foreclosure proceeding, and may allow for the homeowner to protect their credit without the harm of a reported foreclosure.