Distressed Property Owners

You’ve been struggling to make your mortgage payments, and maybe even missed one or two. And then there it is. You opened a letter from your mortgage servicer with the words “Notice of Default” staring back at you.

There’s one thought screaming in your head: “Why is this happening to me?” You’re thinking about your spouse, your kids, your future. “What am I going to do?”

Facing foreclosure is very stressful – nobody wants to lose their home. The truth of the matter is that homeowners have several options besides foreclosure. The timeframe to take advantage of these options is from when the homeowner first experiences financial distress up until the final bank sale or auction.

There are eight options that may be available to you to avoid foreclosure:

1. Reinstatement — Bring the loan current. This is recommended if your financial hardship was temporary. You will have to pay all missed payments, late fees, and legal fees that are due.

2. Forbearance — In the event that you cannot entirely pay your deficiency, you may be able to either negotiate a repayment plan with your lender, or add the balance to your principal.

3. Refinance — If you have sufficient equity and income, and you still have healthy credit, you may consider refinancing.

4. Loan Modification — Some lenders may be willing to modify your loan by either lowering your interest rate or principal to keep your payments affordable.

5. Rent the Property — If your mortgage payments, insurance, taxes, and other housing fees are less than what you could rent your property for, this is your last option to keep your home without having to sell it or lose it in a foreclosure.

6. Sell the Property — If you have sufficient equity, but your payments are higher than what you can afford, selling your property is certainly an option.

7. Short Sale — If you owe more than what your property is worth, and none of the above options apply to your situation, then this may be the best option available to you. There are many reasons why a short sale is better than a foreclosure. Make sure that you understand them.

8. Deed in Lieu of Foreclosure — In effect, this is very similar to a short sale, but you will need the assistance of an attorney. Although, it does become complicated when there is more than one lender involved. Your lender may be more likely to approve a short sale than a deed in lieu because a deed in lieu places the property in their possession, whereas a short sale will get the property off of their books.

Are you having financial difficulty and fearing foreclosure?

As your CDPE agent, I will explore every option with you and work towards a resolution. While it may not seem like it now, there will come a time where you current financial troubles will pass. You will feel much better knowing that you did everything you could to avoid this devastating financial consequence so many people face today.

Russell Odom is a Certified Distressed Property Expert (CDPE). Don’t hesitate to contact him to find out what your options are if you are in financial distress.