CA Gold Country Foothills Real Estate

Foreclosure? OPTIONS!


Alternatives to Foreclosure

 

So, your house is in foreclosure….now what?? Try to look at the situation without attaching your emotions.  If viewing the situation from a strictly business viewpoint, you can more successfully analyze which option might best suit your needs and desires and move you towards resolving you financial difficulty.  One very important thing to remember: Time is of the essence, so sit and take serious thought of your situation and take a quick action in order to allow yourself enough time to complete the chosen process.

 

 

 

9 Options when facing Foreclosure:

 

  1. Do Nothing: If a homeowner does nothing, they most likely will lose their home at a foreclosure auction.  Loan applications generally ask if the applicant has ever been foreclosed upon.  Credit reports also disclose this damaging information.  Therefore, doing nothing is not the best option.  *Debt forgiveness may cause a taxable event.
  2. Payoff/Refinance: Completely paying off the entire loan amount plus any default amount and fees.  Usually, this is accomplished through a refinance of the debt.  New debt is a normally higher interest rate and there may be a prepayment penalty because of the recent default.  With this option, you will want to make sure there is equity in the home.
  3. Reinstatement: Completely paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
  4. Loan Modification: Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan.  This may allow the homeowner to catch up at a more affordable level.  To qualify, you must prove to the lender you have fixed the problems that caused the late payment. (You must have suitable income) * May cause a taxable event. You  DO NOT need to pay for this service!  Watch out for anyone that quotes you a reduced rate before speaking with your lender!
  5. Forbearance: Lender may be able to arrange a repayment plan based on the homeowners financial situation.  The lender may even be able to provide a temporary payment reduction or suspension of payments.  Information will be required from the lender to show that you are able to meet the new payment plan requirements. 
  6. Partial Claims: A loan from the lender for a 2nd loan that includes back payments, costs and fees.
  7. Deed in Lieu of Foreclosure:  Give the property back to the bank instead of the bank foreclosing.  Banks generally require the home to be well maintained, all mortgage payments and taxes must be current.  Most loan applications ask if this has ever happened.
  8. Bankruptcy: This option can liquidate debt and/or allow more time.  I can refer you to a qualified bankruptcy attorney.
    • Chapter 7 (Liquidation)  Completely settles personal debt (excluding taxes)
    • Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.
    • Chapter 11 (Business Reorganization) A business debt solution
  9. Sale: If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale.  In this case, the homeowner will get cash from the sale.  On the other hand, a Short Sale (also known as a pre-foreclosure sale) can be negotiated with your lender by  CATHY SARMENTO your Real Estate Professional if what is owed is MORE than the properties value. * May cause a taxable event.

 For more customized information and a time line of the foreclosre process, contact Cathy (530) 823-5783 or email

Cathy@CoolRealEstate.com

 

 

 


Cathy Sarmento