Reinstatement

A reinstatement is the simplest solution for a foreclosure however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

PRO's & CON's

  • Does not require Mortgage Company or lender’s approval.
  • Requires that a homeowner be able to pay all back payments, fines and fees immediately.

Mortgage Modification

A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan the term of the loan or all or any of the above. This typically results in a lower payment to the homeowner and a more affordable mortgage.

pro's & con's

  • Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan.
  • Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

Deed in lieu of Foreclosure

Also known as a ‘friendly foreclosure’ a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Deed in Lieu requires lender approval and requires the homeowner to vacate the property.

pro's & con's

  • Many times in a successful Deed in Lieu the lender will forego their right to a deficiency judgment.
  • Requires that a homeowner vacate their property and may be reported to credit bureaus as a foreclosure.

 

Forbearance of Repayment Plan

A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

PRO's & CON's

  • Allows the homeowner to make back payments over time.
  • Requires that a homeowner be in a financial position to pay not only their current mortgage but a portion of the back payments owed. Some mortgage companies will require a homeowner to ‘qualify’ for forbearance.

Rent the Property

A homeowner who has a mortgage payment low enough that market rent will allow it to be paid can convert their property to a rental and use the rental income to pay the mortgage.

Pro's & con's

  • Allows homeowner to keep property indefinitely..
  • The issues that can arise with a rental property are many and rent often does not cover the full cost of property ownership and maintenance.

 

 

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