When a lender forecloses on the home of a mortgage holder, the natural tendency of many homeowners is to do anything to stay in their home. After all, at some point a house becomes a home. Losing that home can mean uncertainty, taking kids out of school and away from their friends and scrambling to find alternative housing.
But in some cases, the homeowner simply wants to avoid the foreclosure process and give their home back to the bank. There are several reasons for this course of action, and some make sense.
Here are the keys…
A homeowner may not be able to afford their home any longer because of a rising ARM or a subprime loan. They may be able to take less of a hit to their credit by making an agreement with the bank to take the property back. This is called a deed in lieu of foreclosure. The homeowner signs the property back over to the lender. This can potentially keep everyone out of court.
In some cases, the homeowner may be able to arrange a short-sale. Depending on the homes current market value, the lender may agree to let the homeowner sell the home for less than the outstanding balance of their mortgage. A lot depends on the expectations that a short sale would be a success. Either choice requires a lot of paperwork.
If the lender won’t agree to these options, then a homeowner needs to investigate modifying the terms of their mortgage to make the payments affordable. This might be the only solution left when a homeowner is not able to simply walk away. Loan modification can change the terms of the loan and make it affordable.
Those in the business of loan modification know how to talk to the staff in the lending department in a language that both understand. Their efforts may be able to avoid foreclosure altogether. While walking away may seem like the easy way out, a loan modification can remove the need to do so.
Wed, Nov 12, 2008
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