There are a large number of people who are in a financial bind for one reason or another and can not make their house payment. Many people contact me when it is too late and have missed too many payments and the bank is about to foreclose. Unfortunately when it gets to that point there may not be enough time to work out something with the lender or to short sale the home. Here are some options a homeowner should explore before trying a short sale, Deed in Lieu of Foreclosure, or letting the lender foreclose. If you do not know what a short sale is please visit my article What Is A Short Sale.
The first thing a homeowner should do to try to keep their home. This is going to take a lot of phone calls to contact the lender or lenders. The department the homeowner should contact is called “Loss mitigation”, but can also go by loan modification, foreclosure, short sale, reinstatement, or work out department. Please also be aware that the customer service phone number on payment vouchers may be the servicing company and not the lender or investor that owns the loan. Once the correct department has been reached the homeowner should explain the situation of why the payments have or will stop in the future. In some of my consultation homeowners look at the lender as an enemy instead of working with them to solve the problem, remember the lender does not want to own properties.One option with the lender is to apply for a Loan Modification of your current loan. This will change the terms of the original loan without going through the process of refinancing the loan. The lender will have to look at all necessary financial information and credit to get a homeowner approved for this type of option. The payments that have been missed may be added to the balance of the loan. The agreement will require a signature from the owner and a new modified monthly payment will reflect the changes.
A second option would be a Special Forbearance Plan or Repayment plan for the payments an owner has already missed. This option is for the homeowner that can make their payments now but has missed previous payments that are difficult to make up. If the homeowner promises to repay the delinquent payments the lender, mortgage insurer, and/or investor may delay foreclosure. The homeowner must also be approved for this option and will have to submit all requested financial information. A portion of the missed payments may be added to the current payments until the account is in good standing.The third option is only for those homeowners with a FHA loan and is called a Partial Claim, contact the lender to determine if you qualify. A homeowner with an FHA loan may be eligible to receive funds from HUD, US Department of Housing and Urban Development, to bring a loan current. This will need to be applied for and will require financial information to be approved.
Everyone is aware of the current challenges financial institutions are facing with the growing number of defaulting loans. This has caused these above processes to take more time to be approved and processed. Anyone who is in this situation needs to be patient and persistent with the lender to achieve the desired goal.There may be other options available through your lender that has not been discussed. If you have had a financial hardship and would like to discuss this with someone other then your lender contact the Homeownership Preservation Foundation at 1888-995-HOPE.
If these options are not plausible for your situation and the next step for you is to consider a short sale please contact me. I am a short sale expert with experience in aiding my clients in this situation to get their home sold. I sell properties in Northern Virginia including Prince William County, Manassas City, Manassas Park, Fairfax County, Fauquier County, and Loudoun County. If I do not work in your area I will still be happy to answer any questions and direct you to a short sale expert in your area.
Here is a list of documents that you may need.