Disclaimer – This is legal information, not legal advice. For advice specific to your situation contact a foreclosure prevention attorney such as myself. I will be happy to give you a free evaluation and to propose solutions.
It is in almost everyone’s best interest to stop foreclosure. Foreclosure can cause your credit score to drop from 200-300 points. In addition, it could take years to qualify for a mortgage to purchase a new home. In this post, I generally discuss many of the options that you have when facing foreclosure. This video and blog post is a broad overview and does not go into detail for each option. However, I plan on following up with more detailed posts and videos for each option.
#1 Loan Modification
A loan modification can be used to modify the original terms of your promissory note to a new agreement. This goal of a loan modification is to lower your monthly payment to a more affordable rate. Generally, the missed payments and are spread out over time. In order to qualify for a loan lenders want to see evidence that you can actually pay them.
#2 Forbearance Agreement
In a forbearance agreement, your mortgage servicer agrees to reduce or suspend your monthly mortgage payments over a set period of time. Generally, after this period has ended you must resume full payments plus an additional amount to get current on missed payments. Much like loan modifications, lenders want to see that you can actually pay them back
#3 Sell Your Home
You can sell your house to pay off the loan and stop the foreclosure. If there is enough equity in your house, you may get cash out of the deal. The issue here is whether or not you can sell your home faster than the pending foreclosure sale. In addition, selling your home fast may require a significant discount.
#4 Short Sale Your Home
A short sale is selling your property for less than what it is actually owed. Selling your home for less than what is owed creates a deficiency. Because the lenders will not get paid everything that they are owed, it requires the approval of all lenders.
#5 Deed-In-Lieu of Foreclosure
A deed-in-lieu of foreclosure is where you voluntarily deed the property to the lender in exchange for the release of all mortgage obligations. However, many lenders will try to get you to deed the property back without forgiving the outstanding debt. For this reason, it’s best to hire a qualified attorney to negotiate or review any agreements.
#6 File For Bankruptcy To Stop Foreclosure
Bankruptcy can be used to create an “automatic stay” which is an automatic injunction that temporarily stops the foreclosure process. Depending on your specific situation you may sell your home through bankruptcy or work out a payment plan to keep your home. Bankruptcy can possibly wipe out all outstanding debt.
BONUS – Ask Obama For Help
If you were a victim of the subprime mortgage crisis, check out the qualifications for the Home Affordable Modification Program started by President Barack Obama to see if you qualify.
A Caution on Which Option is The Best Option To Stop Foreclosure in Maryland
There are many people who provide only one solution to stopping foreclosure and will sell you their service as the best option, even though it may not be the best. The home buying companies will insist that selling your house fast and as is the best option. The loan modifiers will tell you to get a loan modification. The short sale experts will try to convince you that short sale is the best option. And, the bankruptcy specialist will try to convince you that bankruptcy is the best option. At The Pendergraft Firm we have no incentive to sell you a particular service that may not be in your best interest. I am both a licensed attorney and broker that is capable of providing each of these services. Contact me for a free evaluation of which solution may be best for you.
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