subject: Consider These Two Options to Prevent Foreclosure [print this page] Are you having trouble with your mortgage payment? Then you can benefit greatly from loan modification and short selling. These are your two best options to avoid possible foreclosure.
Unfortunately for most homeowners, they usually do not know if they could qualify for a program that will help them to get out of the mortgage problem. They also do not how to avail of government support provided for troubled homeowners. The sad reality is that a very small portion of the $75 billion federal money for the home sector has been used to assist homeowners. This is due to the hesitation of borrowers to ask for help from their banks and the confusion on how to get government help.
A loan modification is a process that alters the terms of your existing home mortgage. The terms are usually adjusted so that the homeowner can enjoy a considerably lower monthly payment. Lowering the monthly payment can be done through reduction of interest rates, extending the lifetime of the loan, or reducing the loan balance.
The US Treasury Department has an existing program called HAMP. More than 90 percent of loan servicers and banks are providing HAMP for their clients. The program seeks to provide new payment terms for homeowners to make the mortgage more affordable. Homeowners however should meet certain eligibility requirements in order to qualify for HAMP.
Sadly, there are so many homeowners who can not qualify for this federal program. There are also homeowners who can no longer afford home ownership. But a big number of applicants who were declined simply failed to submit the complete requirements of the program. There are also applicants who failed to follow up their banks after submitting the modification application. You have to remember that banks are generally overwhelmed with applications. Applications that are incomplete or those that contain incorrect documentations are set aside by the banks. That is why you have to regularly check the status of your application to determine if you need to fix your submission.
For homeowners who really can not afford home ownership or those who can not qualify for loan modification, they could explore to short sell their homes. A short sale means that the home has been sold for less than the amount owed. This is an alternative option where the bank agrees to simply settle the loan so that the homeowner can move on. This option is under the Federal Home Affordable Foreclosure Alternative or HAFA. This program seeks to provide protection for homeowners and also offers some incentives. The HAFA program provides a move out allowance for borrowers amounting to $3,000. Borrowers are also given complete release from any future liability.
Troubled homeowners therefore can explore two alternatives to foreclosure. They can choose to modify the mortgage or they can short sell the property.
Homeowners who can not pay their mortgage loan anymore could explore these two options. A loan modification is best for those who intend to keep their homes. However, homeowners who can not meet the eligibility requirements could explore the possibility of short selling just to avoid a foreclosure.
