Avoiding Foreclosure…
The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CRSA, CSP, GRI, ePRO®, Realtor®
Avoiding Foreclosure…
Nationwide, 1 out of 10 homes are either delinquent or in foreclosure…
The current U.S. housing market and financial crisis have caused tremendous stress and heartache for families across America. During times like these, there are always a certain percentage of homes or homeowners who are distressed.
According to the Mortgage Bankers Association®, as many as 1 out of 10 homes are either delinquent or in foreclosure, and unfortunately, 7 out of 10 homeowners in foreclosure proceed without the assistance or advice of real estate professionals or mortgage representatives. If your home is at risk of foreclosure, you don’t have to panic. There are many ways to ease the difficult situation, and one may be right for you.
The country has seen a recent spike in foreclosures and defaults. As a result, in addition to new legislature, lenders have been more willing to work with distressed borrowers to help keep them in their homes.
If you or someone you know is in this unfortunate situation or may be soon, now is the time to act. I hope you’ll find that the following information will not only explain the ins and outs of foreclosure; but, how you can avoid it and what your various options are.
You don’t have to be the next victim of foreclosure. There is help available—if you know where to look.
Be sure to talk to a professional to find the best option for your specific situation.
The Basic Foreclosure Process…
1. Default—homeowners must miss a payment or default on payment for the property to enter the foreclosure process.
2. Legal Notice—the lender of the foreclosing property must notify homeowners that they are entering into the foreclosure process.
3. Bank Sale or Auction Date—homeowners are informed that they have a bank sale or auction date at which point the foreclosing mortgage company will gain control of the property.
4. Redemption Period—the period of time in which homeowners may present payment to the bank and regain possession of their property. (Not all states have a redemption period.) The normal redemption period for Alabama is 1 year. However, there are exceptions to this rule which can extend or cause forfeiture of the redemption period
For more information, contact your real estate agent or mortgage representative.
Options for Avoiding Foreclosure…
• Reinstatement – To reinstate a mortgage, the homeowner has to pay all the missed payments, late fees and legal fees that are due up to the date that the loan is reinstated.
• Forbearance or Repayment Plan – The lender allows the buyer to pay the missed amount over a period of time or the lender places the missed payments on the end of the amortization of the loan.
• Rent the Property – In some cases, homeowners facing foreclosure will have payments low enough to allow them to rent their property and keep up their mortgage payments.
• Sell the Property – If sellers have equity in their property, they can sell it and prevent a foreclosure.
• Refinance – If homeowners have sufficient equity and income and their credit has not been too badly damaged, they may be able to refinance.
• Mortgage Modification – A loan modification is very similar to a lower interest refinance where the lender lowers the interest rate on the existing loan to lower the payments.
• Short-refi – This process involves the refinance of a home with a reduction in the principal balance and often the interest rate as well.
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