Considering Other Options Than Foreclosure

In this post we deal with options other than foreclosure that a homeowner may consider. Some of the options involve a Realtor and other options do not.

Homeowners Have Choices:

1. Refinance: Homeowners work with lenders in the new HAFA program to reduce monthly payments amounts. No Realtor involvement is necessary.
2. Lender Workout: Lenders at time will work with homeowners to restructure the loan and forgive missed payments or add them to the end of the loan. Fees can be wrapped into the new loan and interest rates lowered. No Realtor involvement is necessary
3. Sell and bring cash to closing: If the homeowner has other resources, lenders will expect sellers to liquidate assets and bring money to closing to pay off the difference in the mortgage amount and the sale price of the home.
4. Short Sale: In a short sale the lender agrees to accept less than full payment and to at least partially satisfy the amount owed to the lender. Short sales wont damage the homeowners credit as much, have less impact of the neighborhood home values, and are a more civil way for lenders to release homeowners from their obligations.
5. Deed in lieu of foreclosure: this occurs when the borrower agrees to trade the property to the lender and the lender agrees to cancel the note. In declining markets, lenders are less likely to accept this alternative. No Realtor involvement is necessary.
6. Do nothing or walk away: At times a homeowner may simply be upset that the value of the property has dropped or that the other options available are too difficult so they just decide to walk away. Homeowners should always check with their attorney and account about this option because the consequences can be far more substantial than for homeowners than those who attempt to complete other alternatives. No Realtor would recommend this alternative but a Realtor is not needed in this option.

There certainly may be other options not mentioned above and there are many variations to the options above. The Federal Governments current recommended choice is a short sale or deed in lieu of foreclosure and new guidelines have been established to move these processes through more quickly.

Please contact me for further information on foreclosure alternatives.

Posted By: Steve Randall