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FORECLOSURE
RESOLUTIONS STRATEGIES
Working
with GLG who understands how to
get you the best possible workout is always your best
choice. We can assess your financial situation
and help you determine your best strategy. Some
lenders are extremely hard to deal with GLG knows how to handle lenders.
Following
are some Foreclosure Resolution Strategies:
Total
Reinstatement
Repayment Plan
Forbearance
Plan
Loan
Modification
Partial Claim
Program
Refinance
Shortsale/Preforeclosure
Sale
Bankruptcy
Total
Reinstatement
This process involves totally bringing your loan
current in one payment. You will be required to
provide a certified check in an amount, which will
include all past due payments, late charges and any
fees and costs, which have been assessed to your
account.
Repayment
Plan
This process involves making up the amount past due
over a period of months by paying a full payment plus
a partial payment on the past due balance each month.
You will be required to give your lender a cast
contribution equivalent to 40-50% of your total
arrears (total of late payments, bank fees and
attorneys fees). Coming up with such a lump sum
is quite difficult for homeowners who just faced a
hardship. That is when working with Foreclosure
Solutions USA can be very beneficial. We are
able to give you some time to come up with some money
to offer your lender.
The
keys to getting into one of these plans are:
Forbearance
Plan
This process involves the reduction or suspension of
payments for a period of time followed by a period of
time during which the deferred payments are made up,
similar to the repayment plan.
Loan
Modification
This process involves the change of the original terms
of the mortgage through one or a combination of the
following methods:
Delinquent interest amount to the current unpaid
balance, and/or
An extension of the term of the mortgage.
A
loan modification requires the prior approval of the
loan company or investor. A modification fee
will be charged. A cash contribution toward
compliance with any additional requirements of the
lender and/or investor.
Partial
Claim Program
Certain loans qualify for this program, in which the
homeowner is required to give a cash contribution
equivalent to 40-50% of total arrears, and the
remainder of arrears is loaned to the homeowner
interest free. The homeowner will have the
remaining term of the mortgage to pay off this loan in
full.
Refinance
This is another one of the more heavily marketed
solutions. The main barrier that most people run into
with refinancing is not having enough equity to obtain
a "sub prime" or "bruised credit"
loan. This is the type of loan that you will most
likely need to refinance into due to your foreclosure
situation.
Another
problem is that mortgage companies have a history of
reporting to their borrowers that "everything is
fine", when in fact nothing is usually set in
stone until the final loan papers are drawn up.
It
is generally not recommended to leave your entire fate
in the hands of a mortgage company. It is too easy for
them to back out in the final hour, leaving you in a
very dangerous situation.
In
many cases where enough equity exists, refinancing can
be a simple solution. This can be done through a new
mortgage company, or through a negotiation with the
current lender in which they refinance the current
mortgage to include the past due amount (the arrears).
With this form of financing, new loan documents are
drafted.
Be
aware that if there are any other mortgages on the
property, second mortgage,
home equity loans, etc., these junior lien-holders
must agree to remain in their present lien-holder
position by entering into a subordination agreement
with the primary lender. If there are no other
mortgages, the process is much simpler. The homeowner
will benefit from this type of refinancing in that the
lender will
wrap the past due payments into the new loan. (much
like a loan modification)
The
biggest barrier that is faced in exercising this
option is a lack of equity. A straight refinance
usually works only if you have substantial equity in
your homes
.
Shortsale/Preforeclosure
Sale
This strategy can be attempted with great success if
you don't have the funds or the ability to keep your
home.
A
shortsale is when the lender agrees to accept less
than the full principle plus arrears as payment in
full in exchange for being paid off right away. The
most the lender will usually discount is ten to
fifteen percent of the full amount owed. The prudent
lender will cut their losses, saving money from being
spent on additional foreclosure costs and legal fees
versus taking the property back and then having to
market and sell the property.
This
strategy of a shortsale is usually performed through a
third party professional and who is also experienced
in negotiating shortsales. The lender factors in
something that they call the "time-value of
money". The experience and expertise of the
professionals that you use will have much to do with
the success or failure of the technique. Make
sure that the people you use specifically have
experience successfully negotiating shortsales.
We
recommend Platinum Property Management
to our clients looking for this resolution type.
Please call us for any information on how to contact
their office.
Bankruptcy
Generally speaking, of the various chapters of
Bankruptcy available, the option that provides the
most protection to a homeowner who has substantial
arrears and is trying to save his/her house is Chapter
13.
Discussing
the many details of the differences between Chapter 7
and Chapter 13 is beyond the scope of this information
being provided
Bankruptcy
is a severe form of financial reorganization since it
involves government intervention into your financial
affairs as well as publicly blemishes your credit
report for several years.
In
order to file for bankruptcy, a filing fee must be
paid, plus any attorney costs, and an assortment of
forms and schedules must be filed with the clerk of
the Federal Bankruptcy Court. Both extreme care and
honesty must be exercised while filling out these
forms and schedules. Mistakes can result in a
dismissal of the petition as well as non-discharge of
certain debts.
To
find out more about these forms and all the details of
bankruptcy, you should consult with a bankruptcy
attorney. |
