Foreclosure Alternatives

Foreclosure Alternatives

Foreclosure Alternatives

Facing foreclosure, homeowner's often assume they have two options: pay up or move out. The truth is multiple options are available:

Forbearance: Delays collection activities so homeowners have time to explore their options or obtain gainful employment. Forbearance may include a period of no required payments or be accompanied by an installment plan for catching up on missed or late payments. Forbearance is only practical for those who have recovered from a financial setback.

Bankruptcy: Possible for homeowners drowning in unsecured debt like credit card debt.

Loan modification: Makes monthly payments more affordable by changing one or more terms of the loan.

Reinstatement: Allows homeowners to bring their payments current. This option is only for homeowners who have recovered from a temporary setback like a job loss.

Government loan programs: Numerous are available based on your situation. Read more http://www.makinghomeaffordable.gov/Pages/default.aspx

Selling your home: Allows homeowners to get out from under an unaffordable home and cash out any equity.

Short sale: Selling your home for less than the unpaid balance without owing the lender anything after the sale.

Redemption: Involves buying back the home after foreclosure. To redeem the property, you pay the bank the full amount paid for the property at auction, plus any qualifying expense. This option is not available in all states.

Deed in lieu of foreclosure: Giving the property back to the bank and walking away without owing anything on it. You sign property rights over to your lender, vacate by the agreed upon date, and your lender cancels your debt. If you choose this option, hire an attorney to review the paperwork before you sign anything. You want a deal that lets you walk away and prohibits the lender from pursuing a deficiency judgment.

Abandoning the home: Use only if you have exhausted all other options and your lender won't deal with you.

Doing nothing: Worst option. Unfortunately, this is the option some people choose. Remember, the sooner you take action, the more options you have.

Remember, you are not alone. Millions of Americans have lost or are at risk of losing their home to foreclosure. The key is to stay informed. To search additional or new programs that come out, try:

Visiting the HUD Website, www.hud.gov to find announcements about government sponsored programs.

Visiting the Fannie Mae Website, www.fanniemae.com to see if Fannie Mae is offering any new homeowner relief programs.

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