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Forbearance or Workout Agreement
A forbearance allows
you to temporarily reduce, postpone, or suspend making payments on
your loan. Interest continues to accrue, and when the forbearance
expires the unpaid interest is added (capitalized) to the principal
balance of your loan. A forbearance request must be approved by your
lender.
Since one has fallen behind in the mortgage payments there can be
legal fees, late charges interest accrued and other charges that are
delinquent. This is called "Workout Agreement or "Forbearance
Agreement". The loss mitigation department of your mortgage
company may make arrangements with you to pay some of the back
payments now and the balance within a certain time period.
It all depends on the circumstances and the bank's attitude towards
the arrangement.
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Reinstate Your Mortgage
If you call the law
firm handling your case, they will give you the exact amount to
bring the loan current. To reinstate the mortgage back, all
outstanding amounts has to be paid back. It would include
interest, legal fees, etc. You may borrow from your friends
and family to come up with this arrangement. Or you may be
able to arrange a second mortgage to catch up the back payments and
other costs. We have contacts that can see if this is a
possibility for you.
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Get a Brand New Loan
Generally speaking if
you have fallen behind on your mortgage payment your credit score
will be affected and it will be difficult arrange a new financing.
Be very cautious about sending advance fees of $300-$600 to lenders
or mortgage brokers. Usually it is a ploy to take advantage of
your financial situation.
Arranging a new loan will depend on your income, credit report,
value of your home and the amount of the equity in your house.
Keep in mind that all is that possible if you can do all that in the
time limit you have up to the auction (foreclosure) date.
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Chapter 13 Bankruptcy
This is one process
that can stop the foreclosure process but get some legal advice
before you do that. Note that bankruptcy and foreclosure stays
on your credit report for about 7 years and has to be disclosed on
every loan application you do in the future. The choice is
yours.
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Sell your Home in the Open Market
Most people try to sell
the house in open market as FSBO" For Sale by Owner. That is
to save the commission and get the most money out of the sale and
pay off the outstanding loan.
You may not have enough time to trying to sell as FSBO or through a
realtor.
And this is the time we can step in, buy your house and take care of
the foreclosure.
Remember that the when the Lis Pendens notice is issued, this
process start the clock starts ticking and it may not stop until the
auction takes place or something is done to make up the outstanding
balance due etc.
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I Could Buy your House
Recently, we had a
young couple who were losing their home in Florida. After
meeting with them it was determined that the best option would be to
list the house with the realtor. The house was listed with the
realtor with one exception that if the house did not sell but was
purchased by us then there would be no commission deduction.
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Let your House be Sold on the
Courthouse Steps
The absolute worst
option is doing nothing and letting the house go to the auction and
letting the bank take the home back. If the house is sold
under market price (typically 30-50%) and the bank suffers loss they
can file a "Deficiency Judgment" and pursue you
for the amount of their loss. We always negotiated for your
best interest and attempt to have the bank agree to not filing the
judgment against you.
Typically ten days after the
foreclosure auction, a certificate of the title will be issued by
the courts to the new owner.
If you have not voluntarily
vacated your house at this time you could be forced to move out
within 24 hours.
