RealtyTimes recently published a good overview of options for those homeowners who are facing foreclosure.
Foreclosure is the process whereby a bank or other lender takes possession of a mortgaged property due to the borrower’s failure to keep up the mortgage payment. Although the definition is simple, the process is actually very complicated and can be overwhelming. The process can be tough both financially and emotionally.
You can help minimize this distressing situation by educating yourself as to your options. Below are several tips for homeowners facing foreclosure to help fix their situation.
1) State Programs For Homeowners
The foreclosure process varies from state to state and includes both state and national guidelines. Many homeowners are not familiar with the laws and programs offered by their states.
In Alabama, there are several resources that you can investigate.
The Alabama Foreclosure Prevention Collaboration, along with the United Way and the Department of Housing and Urban Development, has created a 211 line for mortgage loss mitigation and foreclosure assistance. When you dial “211” and request assistance regarding foreclosure, you will be redirected to the neared HUD approved counseling agency. There are 56 such agencies throughout the state.
Also, you can call Hope Now at 888-995-HOPE or you may visit their website at www.hopenow.com.
You can also visit this HUD website for links to various other resources throughout the state.
2) Deed in Lieu of Foreclosure
Your first action when you miss a payment (or think you might start missing payments) should be to communicate directly with the lender. Based on your communications with the lender, they may offer what is called a “Deed in Lieu of Foreclosure.”.
This option can benefit both parties — the lender and the borrower. The homeowner agrees to give up the deed to the property, and the lender is saved the expense of a lengthy foreclosure process without damage to the property.
The borrower also walks away with a release of liability (sometimes called “release of deficiency”) and without a foreclosure on their credit record. Sometimes the loan will be referred to as “settled less than full.”
This option can vary on several factors, including who the investor behind the loan is, other mortgages on the property, etc. This is generally NOT available if you have a second mortgage or a Home Equity Line of Credit.
3) Short Sale
A short sale is a process where the buyer negotiates with the bank to buy a property for less than the existing mortgage balance.
A short sale is often a last ditch option before facing foreclosure. It is a way that you can save your house from foreclosure, and avoid having a foreclosure on your credit report. Although the short sale will affect your credit, it is much better than having a foreclosure on your record. You will be able to get a new loan sooner, and you will not have to admit on any future loan applications that you have had a foreclosure in your past.
Short Sales area an area that we can help you with. We are very experienced in negotiating short sales as a way to purchase houses. Call us at 205-390-1050 if you are interested in pursuing a short sale on your house. We can help you avoid foreclosure on your Birmingham house. You may also visit our home page at www.WeBuyBham.com.
4) Cash for Keys
Cash for Keys is an agreement between the lender and homeowners/tenants that may allow homeowners/tenants in already foreclosed homes to avoid the eviction process (after the house has been foreclosed and you are still living there, you are really a mort of a “tenant” at that point).
Generally, the tenant must agree to vacate the house and leave the property in good condition. In exchange, the lender will agree to pay you some cash once the keys have been turned over. The amount of the check will vary depending on the value of the house.