What Homeowners in Foreclosure Should Know… Part 4

Michael Schulman

What other options do I have?

It is important to take a step back from the foreclosure to address any other options you may have. At this point, you are out of settlement conferences as no modification was able to be worked out, and a Referee has been appointed to compute the amount owed to the Lender. The foreclosure at this point is fairly far along.

One possible option is to put your home up for sale, and do a short sale. This is where the Lender agrees to take less than what is owed on the property. Every Lender has different criteria for short sales and often times it takes some time for a Lender to approve or deny a short sale offer. If your Lender approves a short sale they will accept the reduced amount as full payment of what is left to be paid on the mortgage, you will be released from any further obligation on the mortgage, and the foreclosure will be discontinued.

Another possible option is to file for Bankruptcy. This puts an automatic stay on the foreclosure. Bankruptcy rules are very complicated, and it is important to consult with an experienced Bankruptcy attorney if you are considering this option. Filing for Bankruptcy has an affect at many parts of your life, such as your credit. If your credit is affected this can impact many areas of your life including future purchases of cars or homes for an extended period of time. You should be made aware of all of the ramifications before you decide whether filing for Bankruptcy is the best option for you.

If you have a large sum of money, a forbearance agreement or repayment plan may be a possible option for you. With these options, you provide a large monetary down payment to the Lender, and then pay back the rest of your arrears in monthly payments for a set period of time, while at the same time picking back up your monthly mortgage payments. If you have been in default for an extended period of time, or have a large amount of arrears, this may not be an option, as the amount to cure the default may be too large.

If at any time you have a change in financial circumstances, such as gaining new employment with a higher salary, getting an additional job for extra income, taking on a tenant who is contributing, you have a family member or friend who is willing to make monthly contributions towards your mortgage payments, or your monthly obligations get reduced, you can and should apply for another loan modification review. Any of these could result in a change of circumstances, which now allows you to be approved for a loan modification. If you are being reviewed for a loan modification, often times Lender’s put the foreclosure action on hold as well to allow for the review to be completed.

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