Foreclosure, Loan Modification & Short Sales

How to Prevent Foreclosure

If you're behind on your mortgage, it's possible to work with your lender to prevent foreclosure. It's also possible to keep your home when you can catch up on the mortgage payment to avoid a tax lien or home foreclosure. Below, we'll take a look at some of the options available to you if you're facing foreclosure:

  • Deed in Lieu - a deed in lieu is used in some cases to transfer the deed back to the lender in order to avoid the time and expense of foreclosure proceedings. Generally, the borrowers must have used their best efforts to sell the property at fair market value and be unable to afford the mortgage payment or make up the balance of what is owed.

  • Short Sale - a short sale is an agreement with a lender to allow a property to be sold for less than what is owed on the mortgage loan and release the borrower from a lien on the property. In a short sale agreement, it's important for the borrower to get the lender to agree not to seek a deficiency judgment for the balance owed.

  • Loan Modification - this is an agreement with the lender to refinance the mortgage payment or amount owed in order to avoid a bank foreclosure proceeding, trustee's sale, or non-judicial foreclosure.

  • Redemption - redemption is a right of the borrower to redeem the property before it's sold under a power of sale at a trustee's sale by paying the amount owed and costs.

Making Home Affordable (MHA) Program

This is a program created under the Obama administration to provide relief from foreclosures to struggling homeowners. Eligibility requirements vary by program and may not be available if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac. Some types of relief offered includes:

  • Home Affordable Modification Program (HAMP) - this is a government program designed to help homeowners get a loan modification.

  • Home Affordable Refinance Program (HARP) - this program is designed to help underwater borrowers refinance to a lower mortgage rate when they owe more than the home is worth.

  • Principal Reduction Alternative (PRA) - this program assists homeowners in getting the principal amount owed on the home reduced when they have insufficient income to pay on an underwater property.

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