Options

There are several options available to homeowners to help them avoid foreclosures on their credit.  Below is a list of the most common ways to avoid foreclosure...

You Could:

Pay Current: By contacting your lender you can find out the exact dollar amount that you owe on your mortgage and make a payment to "catch up" the arrearage.  But doing this would mean that not only do you need to pay your current payment, but all your past due payments in one lump sum which could be double, triple or even more than what your current payment is.  Up until the Sheriff's Sale of your home you can do this.  There is no redemption period in the State of Illinois where you can repay your mortgage after the Sheriff's Sale.  Once it is sold at auction it is no longer your home. 

Sell Your Home: By listing your home for sale you may be able to get out of the foreclosure if you can sell it for what is owed on the mortgage plus any accrued late fees and legal fees.  If you are unable to sell for the price needed to pay off the entire debt owed to the bank then you will be hit with a deficiency that the bank will require you to pay back.  That is IF you are even able to sell the home in the current down market.

Forbearance Agreement: An agreement by the lender not to exercise the legal right to foreclose in exchange for an agreement by the borrower to a payment plan that will cure the borrower's delinquency.  You as the homeowner can work directly with your bank to set up this arrangement.  The difficulty most homeowners have is that the payments are a payment and a half,  meaning that the new payment is higher than the original payment that the homeowner was unable to pay in the first place and caused them to go into foreclosure.

Refinance: In some cases you are able to salvage your home by refinancing.  But to do this you need to be able to qualify for a new mortgage.  With today's credit crunch, there are fewer "subprime" lenders that are available to refinance these types of loans.  And the lenders who are left are making their guidelines even more strict than before.  So if you are more than 30 days late on your mortgage with no equity left in your home, the chances of refinancing your home are slim.

Deed in Lieu: You may be tempted to give your home back to the bank by signing over the deed and foregoing the foreclosure process.  But doing this is just as bad as having a foreclosure on your credit record.  It is still a foreclosure but a voluntary foreclosure.  Also, a  deed in lieu of foreclosure generally cannot be used when there are junior liens on the property -- such as a second mortgage or home equity loan -- because such mortgages would remain as liens on the property after the transfer. 

Bankruptcy: (See Myth-Conceptions) You may be tempted to file a chapter 13 bankruptcy.  But this will not stop the foreclosure on your home.  What this will do is slow it down.  Once you file a bankruptcy, the bank quickly goes to work on a stay, and they will then go to court, pull your home out of the bankruptcy and continue foreclosing on your property.

If you are unable to do any of the above then you could qualify for a:

Short Sale: This is a great option for anyone who is upside down (owes more than their mortgage) and where none of the above scenarios will work.  A short sale is a sale of the home by a negotiated amount that is lower than what is owed on the mortgage.  This is done by the help of a real estate agent at no cost to the homeowner. 

To get started to see if you qualify for a short sale call me at:

(630) 862-5793

Kari Reed