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Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. There are numerous options available to owners of homes in Gilbert, Chandler, Mesa, Queen Creek area residents to avoid foreclosure. Following is a brief explanation of these potential solutions, including their benefits and drawbacks:
A reinstatement is the simplest solution for a foreclosure, however, it is often the most difficult because the homeowner has to raise cash to pay all back payments and penalties to bring his loan current. 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.
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.
A loan modification involves the reduction of one of the interest rate on the loan, the principal loan balance, the term of the loan, or a combination of all three. These typically result in a lower payment to the homeowner and a more affordable loan payment.
A homeowner who has a mortgage payment low enough that market rent will pay all or a major portion of the house payment and the homeowner can afford to make up the monthly shortfall, can convert their property to a rental property and use the rental income to pay the mortgage. This can be an ideal solution for the homeowner who found a new job out of the area or out of state and has to move, but can't sell their current home.
Deed in Lieu of Foreclosure
Known as a 'friendly foreclosure', a deed in lieu action allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option and the homeowner must give up possession and vacate the property.
Many erroneously considered bankruptcy a 'foreclosure solution,' but it only delays the loss of your home in Arizona. If the homeowner has non-mortgage debts that keep them from being able to pay their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.
If a homeowner has sufficient equity in their property, they have been making their house payments and their credit is still in good standing, they may be able to refinance their mortgage.
Service members Civil Relief Act (military personnel only)
If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with service members in relation to qualifying for this relief.
Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.
If a homeowner owes more for their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market for sale and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardship includes but is not limited to: high mortgage payment increase, job loss, divorce, excessive debt, bad health, forced or unplanned relocation and more.
This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please Contact Sam today for a free confidential evaluation of your individual situation, property value, and possible options. I am not the expert in all these matters, but I can direct you to those who are after determining the best option(s) for you to pursue.