Foreclosure Planning

When borrowers are unable to make their required loan payments, foreclosure is the final action a mortgage company will pursue to recover its losses on the loan. Since foreclosure can seriously damage your credit, you should expose all options. Programs are available that may enable you to modify your loan to make your payments more affordable so can stay in your home. The law may also provide for a court ordered repayment terms to cure a financial default. Everyone?s situation is different, however, sometimes the best alternative for your financial future is to start fresh in a more affordable home.

Reinstatement: You pay your lender the full amount due, including all back payments, fines and fees Homeowners can reinstate a mortgage up to days before a final foreclosure sale, and it doesn't require lender approval.

Rent the Property: For homeowners who have mortgage payment low enough that a rental payment allows the loan to be paid. With rental properties, however, many expenses, taxes, insurance and landlord responsibilities are a factor and a rental income may not cover the full cost of ownership and maintenance.

Loan Modification: If you can make payments on your loan, but do not have enough money to bring your account current , your lender may change the terms of your original loan to absorb your delinquent payments and make payments more affordable. A Loan Modification is a permanent change in one or more of the terms of a Borrower's loan, allows the loan to be reinstated, and results in a payment the Borrower can afford.

Refinance: If you have enough equity in your home and your credit is in good standing, you may be able to refinance an unaffordable loan and achieve lower payments. Refinancing may refer to the replacement of an existing debt obligation with another debt obligation under different terms.

Forbearance: Forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The agreement means you pay only a portion of your regular payment, or no payment at all, for a specific period of time based on your current financial situation. This temporary solution provides time to save money, pay off other bills, find employment or additional employment or recover for illness or injury.

Bankruptcy: Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. Filing may allow you to live in your home and repay your lender under different terms. If you cannot afford your home, you may end up in foreclosure again within a short time. Bankruptcy is EXPENSIVE, damages your credit and can only be declared once every seven years.