Foreclosure is the legal proceeding in which a mortgage holder obtains a court-ordered termination of a mortgagor's equitable right of redemption. Equitable right of redemption is the right of a mortgagor, who has defaulted on the mortgage, to redeem the title to the property by paying off the entire mortgage prior to the foreclosure sale. Foreclosure usually occurs after the borrower has failed to make payments according to the terms of the mortgage or deed of trust. When the foreclosure process is complete:
- The lender can take possession of the property and sell it to pay off the mortgage costs.
- The borrower's credit score will be lowered by several hundred points.
- And the borrower will be disqualified for a new mortgage for at least 3 years.
- Loan Modification - Through a negotiation between the lender and the borrower, the loan terms are modified without refinancing. The rate and terms of your loan are restructured to fit your current financial situation. If we are able to qualify you, the lenders may allow you to add the delinquent amount owned to the current principal balance owed. They may even lower your rate and the monthly payment to help you avoid default and get your credit status restored with them.
- Forbearance Agreement - Under the right circumstances, we can help you work out a repayment plan with your lender, allowing you to cure your delinquent amount over a period of time, and reinstating your home loan with a manageable monthly payment.
- Short Sale - Sometimes it is in the best interest of the homeowners to sell their home; perhaps due to a change in income or lifestyle (newborns, marriages, divorces, etc.) they can no longer afford their mortgage payment. It is never easy to decide to sell under these circumstances. With the current real estate market situation, if you have a little or no equity you may end up with a loss on the actual sale of your home. When you owe more than your home is worth, a short-sale occurs. Our company will assist you, provided the lender agrees, in the sale of your home under the right circumstances. The lender would agree to any net proceeds as full payoff. An appraisal is required for a short sale. I am a certified short sale professional (CSP). I have completed special training for this process.
- Deed in Lieu of Foreclosure - Perhaps you can no longer afford your mortgage payment, you cannot qualify for a loan modification, and neither foreclosure nor short sale are an option for you. You might be able to voluntarily give your property rights back to the investor. Normally your lender will demand a walk-through inspection of your property before they will accept a Deed in Lieu of Foreclosure. Your credit history will still be impacted negatively. However, in most cases this action is viewed more positively by future creditors when compared to a foreclosure or bankruptcy filing.
- Reinstatement Plan - Your lender agrees to reinstate the original terms of your loan once you are caught up.
- Repayment Plan - Your lender will tack an extra amount onto each payment for a set period of time.
- Loan Refinance - Refinancing may be an option if you have equity in your home and a credit score of over 620.
- Pre-Foreclosure Sale - You agree to sell your property before foreclosure takes place. (Requires equity)
- Bankruptcy - Seek legal advice before choosing this option. I can refer you to legal counsel.