Talk to Your Lender to Avoid Foreclosure - Understand Your Options
Talk to Your Lender to Avoid Foreclosure - Understand Your Options
Short sale, foreclosure, and deed-in-lieu are three options your lender may pursue to prevent loss on a loan. Don't think those are the only options, though. Take the time to talk to your lender, and you may find there are other ways for you and the bank to come to terms.
Other options a lender may pursue include:
modifying the length or interest rate
waiting fees or penalties
deferring payments through temporary forbearance
increasing monthly payments to cover past due amounts
modifying an adjustable-rate mortgage to a fixed rate
Banks generally have little incentive to advertise these other options, but they are open to discussion if you take the time to go over your individual situation.
Before you meet with your lender, ensure you have collected your thoughts and that you have some proposed ideas in writing. Doing your due diligence before the meeting shows you have put considerable thought into this, which helps the lender feel more confident that you are actively trying to stop further loss. This preparation may be the tipping point for your lender in choosing to accept your proposal.
Some points to discuss in your proposal and in the meeting with your lender:
You understand why you are having trouble making payments. If your interest rate changed and increased your payment, you need to show evidence you paid on time before the change. If your problems were caused by job loss, illness, or family circumstances, you need to show that it is likely you will have a job soon or that the crisis has passed.
You know the problem is temporary. If your interest rate were lowered to its previous rate, you could cover the payments. You have recovered from illness and are back to work. Lowered monthly payments will help you catch up and be on time in the future.
You are trying to solve the problem on your own. You are job hunting, working part-time jobs, and reducing your living expenses. You almost have enough saved for a good faith payment to get back on track.
You are open to alternatives. You have discussed your situation with nonprofit housing counselors, real estate attorneys, CPAs, or other qualified sources who have helped you put together a few options. You are open to others.
You want to understand the new agreement. Ensure the new agreement will not adversely affect your credit record. Your goal is to have your new payments reported to the credit bureau as "Pays as agreed."
Research your options, write up several proposals you know you can meet, and come prepared when you meet with your lender. Your bank gains more from you paying the loan than having the home sold through short sale or foreclosure. Put your best foot forward to help the bank help you.
Avoiding Foreclosure Recovering Your Property During A Foreclosure Proceeding 3 Ways on How To Stop Foreclosure Ex Head of FDIC Opines that TARP Worsened the Foreclosure Situation REO Listings Update: REO Foreclosures Set Third Record In Last Five Months ForeclosureGate Foreclosure Protection You Get A Grace Period With Preforeclosure What is Foreclosure Anyway? How to sell your property in a market dominated by foreclosures and short sales Foreclosure is Not Your Only Option FHA Foreclosures: Discounting an Already Low Priced Property Using Spirituality To Solve Foreclosure