Is there really a way to stop an impending foreclosure?
Maybe you have lost your job, had unforseen medical bills that are starting to pile up or hardships that have made paying your mortgage payment difficult. There are a few things you can do now to help stop the process of foreclosure.
1. Look for Other Sources of income – Consider the income created by unemployment or disability insurance as possible cash-flow resources. You might consider selling household items, cars or unnecessary items that will help you remain in your home. Even retirement funds can be used, but beware that many people with access to their retirement funds can be penalized for early withdraw and face increased income taxes.
2. Contact Your Lender – Don’t let another minute go by to contact your lender and inform them of the situation. Don’t feel embarrassed or ashamed as they are not like a credit card you haven’t paid on. These folks understand and want to help you keep your home. They are not in the business of Irvine real estate and want you to keep your home.
3. Discuss your options with a Realtor or Agent – After contacting your lender, or in some cases the servicing company that handles the loan for an investor, you may have other options available. Don’t wait! Contact me immediately for the most current of options to stop foreclosure.
Options your lender may suggest are:
Deed in Lieu of Foreclosure – In this option, your lender may accept the return of the title to your home, but beware that the lender may still sue for loss and report any uncollected funds due to loss to the IRS as taxable income to you. This option may have negative effects on your credit report.
Claim Advance – If you have a private mortgage lender, they will often provide a cash advance to bring your loan payments up to date. Sometimes this money is interest free and may not have to be repaid for years. This is not common however.
Loan Modification – In this option the payments you have missed are added to the balance of the loan, making your account current. Your debt will increase and your monthly payments will be higher unless the lender also agrees to extend the term of the loan.
Short Sale – Considered by many one of the best options available to avoid foreclosure, the short sale is an increasingly popular option. In this option, the lender accepts less than what you owe on the property, relieving the homeowner of debt. Lenders are often willing to accept a short sale because it greatly reduces the expense and time involved in foreclosure proceedings. In most cases, a short sale does less damage to your credit than a foreclosure. A qualified REALTOR® will be exceptionally helpful in completing the short sale process with you.
Warning: One note of warning, beware of any company claiming that they guarantee they can stop any foreclosure no matter what you owe. The Federal Trade Commission recently compiled a list of warning signs that a “foreclosure fixer” company may be a scheme. Those warnings include any company that requires you to pay for services upfront, tells you to send mortgage payments to it directly, or asks you to turn over the property deed, or tells you to avoid contacting your lender directly. To learn more send me an email at deepak@HouseInSoCal.com or to contact a real estate attorney for more options.