10 Ways To Avoid Foreclosure #RealEstate

10 Ways to Avoid Foreclosure

1. 1. Special Forbearance - The Special Forbearance is a written agreement between the Lender and Unemployed Borrower that consists of a plan enabling the Borrower to make a partial payment during their search for employment; not to exceed 12 months delinquent Principal, Interest, Taxes and Insurance.
    
   
   2. Loan Modification - This option provides for either a permanent change in one or more of the terms of a Borrower’s loan, which allows a loan to be reinstated and results in a payment the Borrower can afford.
    
   
   3. Partial Claim- Under this option, the Lender will advance funds on behalf of a Borrower in an amount necessary to reinstate a delinquent loan.  A Subordinate Mortgage and Note, in the amount of the advance, is prepared in the name of the Secretary of HUD.
    
   
   4. HAMP-Home Affordable Modification - The Making Home Affordable Modification Program is designed to help Borrowers retain their homes and to prevent the destructive impact of foreclosures on families and communities.  FHA-HAMP is a permanent addition to HUD’s Loss Mitigation Program.  Depending on the default status, the trial payment plan must be for a minimum of 3-4 months.  This option may now consist of a loan mod and or partial claim.
    
   
   5. DIL/CFK-Deed in lieu of Foreclosure/Cash for keys - The Deed in Lieu of Foreclosure allows a Borrower to voluntarily sign the house back over to the Lender.  A Deed in Lieu of Foreclosure cannot be accepted from a Borrower who can financially afford to make their mortgage payments.  The lender can pay, not to exceed $2000 compensation to the borrower.  The money is not paid until the borrower has vacated the property.
    
   
   6. HAFA (Home Affordable Foreclosure Alternatives) Pre-foreclosure Sale Program -The Pre-Foreclosure Sale Program allows a Borrower in default to sell his or her home and use the sales proceeds to satisfy the mortgage debt, even if the proceeds are less than the amount owed.  Outright sale of mortgaged property to a third party and must be an “arm- length” transaction.  Outstanding indebtedness includes; unpaid principle balance + delinquent interest+ partial claim (if applicable).  HUD will pay up to $1000 incentive to the Borrower if closed within 90 days from the date of application; thereafter, the incentive is reduced to $750.
    
   
   7. Short Sale - A short sale work-out is when the borrower and lender come to an agreement where the lender will allow the homeowner to sale the property for less than what it costs to satisfy the mortgage lien, outstanding interest and principal payments, fees and costs in full.  Though the purchase agreement will be between the borrower and home buyer, the bank must fully accept and approve the offer.  If there are subordinate liens on the property, that lien holder will also have to agree to the short sale, taking a small portion of what is actually owed. 
    
   
   8. Traditional Sale - If the property is not negative in equity (determined by BPO/Appraisal/CMA) the Borrower can market the property with a real estate agent and once an offer is received that will satisfy the mortgage lien in full as well as outstanding principal, interest, fees and cost, the parties can close the deal.  Bank approval is not required for this option.
    
   
   9. Rent the Property - If the Mortgage payments are not too far behind and there is no clause in the mortgage preventing it, homeowners may rent the property out and hold it indefinitely.
    
   
   10. Reinstate - By paying all outstanding indebtedness; unpaid principal balance, delinquent interest…fees and cost, foreclosure can be avoided and stopped immediately.
    
    
   
   Guide to Loss mitigation options:
   http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/lossmit