Foreclosure Prevention and Mortgage Solutions

I have posted many articles on preventing foreclosure or modfiying a mortgage. For more information, just search this blog using the “Find It” option on the right. Here is a summary of some things a mortgagor/homeowner might consider. If you have a New York property and would like to discuss any of these options, please call or email me.

Forebearance Agreement – voluntary agreement by the lender to forbear or stop foreclosure -usually the homeowner gets 6 to 12 months to catch up on arrears while continuing to make regular payments

Loan Modification – voluntary agreement by lender to reinstate the loan; may include lower payments or interest rate, paying arrears over the life of the loan; extending the term; converting ARM to fixed

Chapter 13 bankruptcy – homeowner can get 3 to 5 years (up to 60 months) to cure a default and reinstate a mortgage loan (de-accelerate the debt); some homeowners can save thousands by paying unsecured debts (ie credit cards) a small percentage; as long as homeowner complies with requirements there is an automatic stay (injunction) against the lender that protects the home and all assets; procedure is complex and most people who file without a lawyer fail

Short Sale – sell the property for less than the amound due on the mortgage – requires lender’s consent and a qualified buyer

Deed In Lieu of Foreclosure – surrender the collateral in satisfaction of the debt (ie just walk away) – beware that some lenders may insist that you sign a promissory note to repay part of the deficiency (shortfall) over time in installments

Foreclosure Defense – of course, anyone can litigate a foreclosure; the issue is whether it is cost-effective and justified; homeowners can assert defenses and counterclaims against a lender

Refinance – get a new loan to pay the old one; not a very likely solution in the current market; lenders are too strict and many people lack equity