- Home
- Real Estate Success
- Alternatives to Home Foreclosure
Alternatives to Home Foreclosure
- By Sean Rutledge
- Published 07/10/2009
- Real Estate Success
- Unrated
Sean Rutledge
Sean Rutledge represents both
plaintiffs and defendants in civil litigation matters with an emphasis
on consumer protection litigation and consumer rights law. He has
experience in cases involving RESPA, TILA, Foreclosure Defense, breach
of contract, Fair Credit Reporting Act, First Amendment, copyright,
banking and Debtor rights. Sean views the practice of law as a high
calling and is committed to its traditional standards of honor,
integrity, and justice. Sean is the Managing Director at United Law Group. He spends his time in both the New York City and Orange County,
California offices, managing the firms' Manhattan and Irvine offices.
With all they hype in the media about the ramifications of foreclosures, it is important to understand that it is not the only alternative. Families who fear foreclosure need to understand that there are other choices. It is possible to avoid foreclosure even if it seems impossible.
Special Forbearance
Lenders are continually finding more and more creative ways to help people stay in their homes. A special forbearance is a repayment plan that can allow for the reduction or suspension of payments for a limited period of time while the borrower deals with an unexpected job loss or increase in living expenses. These require proof of hardships that can be overcome within a pre-defined period of time.
Mortgage Loan Modification
The United States government has made it attractive for banks work with homeowners to modify their loans to an affordable level. In some cases, this involves refinancing the loan at different terms, in others, extending the length of the mortgage loan. The goal of loan modification is to empower homeowners to reduce monthly payments so they can afford their payments. These programs also require verified hardships and a commitment to repaying the loan in the future.
Partial Claim
HUD offers interest-free loans, which are available in special circumstances. These loans can be used to bring a lapsed mortgage current. However the homeowner must prove to HUD and the lender that the loans could be repaid.
Pre-Foreclosure Sale
This is an excellent option for families who cannot afford their payments but have some equity in their home. It enables the homeowner to sell the property, pay off the mortgage loan and avoid foreclosure.
Short Sale
This is a special option available at the lender’s discretion. Similar to the pre-foreclosure sale with one major difference: the lender willingly takes a loss on the property. Loans settled in this way do not show as satisfied on the credit rating, but are far less damaging to the overall score than an actual foreclosure.
Deed-In-Lieu of Foreclosure
Accepting a deed-in-lieu of foreclosure is typically a last resort. It involves the lender allowing the homeowner to “give back” the property to the lender on a voluntary basis. The benefit to this is that the homeowner takes a lesser hit to their credit, which can improve their chances of getting another mortgage loan down the road.
Understand that lenders are under no obligation to accept any proposal. Don’t wait till the last minute to contact the lender.
Special Forbearance
Lenders are continually finding more and more creative ways to help people stay in their homes. A special forbearance is a repayment plan that can allow for the reduction or suspension of payments for a limited period of time while the borrower deals with an unexpected job loss or increase in living expenses. These require proof of hardships that can be overcome within a pre-defined period of time.
Mortgage Loan Modification
The United States government has made it attractive for banks work with homeowners to modify their loans to an affordable level. In some cases, this involves refinancing the loan at different terms, in others, extending the length of the mortgage loan. The goal of loan modification is to empower homeowners to reduce monthly payments so they can afford their payments. These programs also require verified hardships and a commitment to repaying the loan in the future.
Partial Claim
HUD offers interest-free loans, which are available in special circumstances. These loans can be used to bring a lapsed mortgage current. However the homeowner must prove to HUD and the lender that the loans could be repaid.
Pre-Foreclosure Sale
This is an excellent option for families who cannot afford their payments but have some equity in their home. It enables the homeowner to sell the property, pay off the mortgage loan and avoid foreclosure.
Short Sale
This is a special option available at the lender’s discretion. Similar to the pre-foreclosure sale with one major difference: the lender willingly takes a loss on the property. Loans settled in this way do not show as satisfied on the credit rating, but are far less damaging to the overall score than an actual foreclosure.
Deed-In-Lieu of Foreclosure
Accepting a deed-in-lieu of foreclosure is typically a last resort. It involves the lender allowing the homeowner to “give back” the property to the lender on a voluntary basis. The benefit to this is that the homeowner takes a lesser hit to their credit, which can improve their chances of getting another mortgage loan down the road.
Understand that lenders are under no obligation to accept any proposal. Don’t wait till the last minute to contact the lender.
