10 Steps You Must Know If You Are In Foreclosure

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The options available to you when in pre-foreclosure depends upon your particular situation and each situation is different. As the timeline draws closer to the date and / or the letters sent by the bank / mortgage company and attorney's are ignored, the options become more and more limited.

1. The Best Option: Reinstatement of Loan. So called Cure. This option is paying the lender everything that is owed in one lump sum. This includes any missed payments, all late fees, foreclosure fees, legal and attorney fees and the principal owed during the delinquency. A cure may involve the seller curing or becoming the investor "subject to" the exiting loans, who will cure. Unfortunately, this is not available to most folks. 401K, annuity, CD's or a relative.

2. Repayment Plan: Negotiating a written agreement between the lender and the borrower (homeowner). Typically, these plans are higher than the regular monthly mortgage amount for a period of time until the loan is brought up-to-date. Available to those whose income is higher.

3. Loan Modification: A loan modification involves changing one or more terms of a mortgage to meet your financial situation. The types of loan modification include reducing the interest rate of the mortgage, changing the mortgage product (from an adjustable rate to a fixed rate or interest only mortgage), extending the term of the mortgage and / or add delinquent payments to the mortgage balance , Modifications are NOT granted and there must be, justifiable reasons for the request. The loan modification process takes 45-60 days to go through.

4. Forbearance Agreement: The lender will allow a period of time (3-6 months typically) of either low or no payments at all. We usually see the lender allow a forbearance when there is a temporary loss of employment or a risk in the family. If the lender does not extend the length of the loan, he will pay higher than the original monthly mortgage payments until the loan is bought current. Please understand that this is the case for the forbearance, your property remains in foreclosure until the payments are made. You would therefore find it very difficult to refinance.

5. Deed-in-lieu: A Deed in Lieu of foreclosure is an option in which a borrower voluntarily deals with the property to the bank. The bank does not accept a deed-in-lieu of foreclosure if the borrower is finacially able to make payments.

6. Sale: The borrower sells the property through a Realtor or For Sale By Owner, pays off the loan, and the borrower escapes foreclosure.

7. Short Sale: The borrower makes an agreement to sell the home for less than is actually owed. The Short Sale has to be approved by the lender (s) and this can be time consuming (anywhere from 2 weeks to about 60 days). Short Sales remain a viable option if the borrower (homeowner) fully understands his / her legal obligation. As the credit crunch hitting banks and mortgage companies, more and more short sales are being accepted. If you are looking for a short sale, work for you.

8. Refinance: An option available to the homeowner is to refinance the home. Free Refinance Report This option may not be available in the home. Thus, the homeowner to make higher payments.

9. Sell To An Investor: We may make your payments, late fees, foreclosure fees, legal and attorney fees, while taking over your current payments. You want to be a foreclosure on your record.

10. Do Nothing: Your credit will be ruined for a period of 7 to 10 years. The lender wants to take your home and all your equity. If there is no equity they may come to pay for the shortage or deficiency.

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Source by Paul Tomlinson