4th October 2011 ????? 0 Comments
Mortgage foreclosure has become a hot topic of conversation. News outlets, realtors and mortgage lenders share concerns over the distressed housing market. Mortgage financiers anticipate upwards of an additional 4 million homeowners will be served with foreclosure papers by the end of 2010.
While the mortgage foreclosure forecast appears quite gloomy, options are available to help borrowers avoid foreclosure or minimize the financial consequences associated with home repossession.
The type of foreclosure option is dependent on borrowers? financial situation and outstanding home loan balance. Lenders can offer borrowers a loan modification, mortgage forbearance, mortgage refinance, deed in lieu of foreclosure, and real estate short sale.
The Making Home Affordable program allows borrowers to apply for loan modification or mortgage refinance programs. This government sponsored program is available to homeowners who are current on their mortgage note and have not been more than 30 days late on loan payments within the previous twelve months.
A loan modification alters the terms of the home mortgage loan to reduce the monthly payment. A variety of modification strategies can be implemented by lenders. The most common include temporarily reducing interest rates; accepting partial mortgage payments for a set period of time; and rolling mortgage arrears to the end of the loan and extending repayment terms.
Using mortgage refinance, borrowers are required to apply for a new loan to pay off existing home mortgages. Borrowers with bad credit may not qualify for mortgage refi because lenders have tightened lending criteria. Homeowners in need of mortgage loans for bad credit should first apply for programs under Making Home Affordable.
Borrowers can apply for mortgage foreclosure prevention programs through Making Home Affordable Refinance Program (HARP) or Home Affordable Second Lien Modification Program (MP2).
Another foreclosure prevention option is mortgage forbearance. This special agreement is reserved for borrowers who have fallen behind with mortgage payments but have overcome financial challenges; allowing them to become current with home loans within a short period of time.
Under mortgage forbearance, borrowers are required to submit their normal loan payment along with additional funds which are contributed toward the past due amount. Lenders cannot commence with foreclosure action as long as borrowers meet mortgage forbearance terms. Forbearance agreements generally last between three and six months. If borrowers default on the contract, lenders can proceed with foreclosure.
Borrowers can apply for real estate short sales when they are financially incapable of paying future mortgage payments. When this foreclosure strategy is used, lenders agree to accept less than the full amount owed against the loan.
Short sales are complex and time-consuming. It is best to work with a real estate lawyer or short sale specialist to ensure proper documents are filed. Borrowers must obtain short sale approval from their bank?s loss mitigation department.
When homeowners do not qualify for any other type of foreclosure prevention, banks can offer a deed in lieu of foreclosure. This foreclosure strategy requires borrowers to return the property to their lender and vacate the premises. Homeowners who enter into deed in lieu agreements should work with a foreclosure attorney to ensure they are not held accountable for deficiency between the sale price and loan balance.
Homeowners in need of foreclosure prevention resources or housing counseling services can contact the Department of Housing and Urban Development by calling 1-800-569-4287 or visiting HUD.gov.
Tags:? loan modification, mortgage payments
By gabel
Source: http://www.emortgagenews.info/mortgage-foreclosure-strategies-and-solutions/
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