Foreclosure Options
Usually when clients call us regarding our services, they have missed a few payments and they are in various states of the foreclosure process. We will try to explain what can be done to avoid foreclosure. There are only a few options and here is a quick list:
REINSTATEMENT
This is where the homeowner reinstates the mortgage by paying up all missed payments and fees and becomes current with the mortgage. After all the fees have been paid up then the homeowner can continue to pay the mortgage payments as they had.
FORBEARANCE
more commonly known as a re-payment plan, allows the homeowner to negotiate a repayment of missed payments and fees to reinstate the mortgage.
SELL THE PROPERTY
If there is equity in the property then the home can be sold and the foreclosure can be “cured” thus avoiding the foreclosure. If the home is worth less than is owed plus sales expenses then a short sale must be negotiated (See the section on “Short Sale Explained”).
RENT THE PROPERTY
The property can be rented however the mortgage must be made current. A rental agreement will not stop the foreclosure process. The Al & Dee Real Estate Group preferred management company is Pinnacle Property Management. They can be reached at (228) 374-0880.
REFINANCE
If the credit rating hasn’t been too badly damaged, a refinance may help especially if the monthly payments can be reduced.
DEED-IN-LIEU OF FORECLOSURE
Commonly known as the friendly foreclosure, this involves for the bank to agree to foreclosure and take the property back without the lengthy process. This is not recommended for properties with equity because the owner gives up the right to the property and any equity. This option is technically still a foreclosure and will show up as such on your credit report. Sometimes the bank will forgo any other recourse but that will also have to be negotiated.
BANKRUPTCY
It cannot avoid the foreclosure but may allow the owner to reorganize debt and stall the foreclosure. Another drawback is that it makes it difficult to sell the property and almost impossible to negotiate with any third parties.
SHORT SALE
When the homeowner owes more than the property is worth plus sales expenses, a sale can be negotiated and an approval obtained from the bank to accept an amount less than is owed.
Most of these options involve negotiation with the bank and a decent credit rating. If the credit has been affected already, then the only real option that can help is the short sale.
