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There are several alternatives to foreclosure and the sooner you act, the more likely it will be for a positive outcome. We provide a resource to help you navigate through your options and decide which is best for you given your circumstances.
The current Las Vegas housing market and depressed economy has caused untold stress and heartache for many local families. Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options and solutions to avoid foreclosure are explained below.
Don’t do anything until you understand your options.
If it turns out you owe more that your home is worth and you feel that moving is your best option, a Short Sale is something you will want to consider. Simply stated, a short sale is when a homeowner sells home for less than what is owed on the loan as agreed to by the Lender. The seller typically will not receive any funds.
 The Homeowner escapes foreclosure In most cases, the remaining debt is forgiven and the bank pays “ALL” fees. Short sales are almost always tax free, due to a new tax law (HR3648).
 Homeowner must relocate when the property closes and must typically rent for a period of time. However, most borrowers will be eligible to buy another home in about two years.
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 and pays it. This solution does not require lender approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.
Does not require Mortgage Company or lender’s approval.
Requires that a homeowner be able to pay all back payments, fines and fees immediately.
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.
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. Requires lender’s approval.
For those who want to keep the property, a mortgage modification might make it possible. A “loan-mod” involves the reduction of one of the following: interest rate, principal balance, term, or any/all of the above, typically resulting in a lower payment and more affordable mortgage.
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. This can be a long
process. Lender has to be actively pursuing modifications.
A homeowner who has a mortgage payment low enough that market rent can cover the mortgage payment could convert the property to a rental and use the rental income to pay the mortgage.
Allows homeowner to keep property indefinitely.
Many issues can arise with a rental property and the rent often doesn’t cover the full cost of ownership and maintenance.
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.
Many times in a successful Deed in Lieu the lender will forgo their right to a deficiency judgment.
Requires that a homeowner vacate their property and may be reported to credit bureaus as a foreclosure.
Bankruptcy has been marketed by many as a ‘foreclosure solution’ which in some states and situations it can be. If the homeowner has non-mortgage debt payments that are causing them to fall short of paying their mortgage, a personal bankruptcy can eliminate those debts and may be a viable solution.
Does not require lender approval.
A bankruptcy will only stall, not stop the foreclosure process. Bankruptcy can be costly.
If a homeowner has sufficient equity in their property and their credit is still in good standing they may be able to refinance their mortgage and pay off existing loan(s).
In some cases a refinance will lower payments.
In today’s market with declining values, many homeowners do not have sufficient equity or credit scores to refinance.
Refinancing can be costly. Look very closely at all of the terms is you decide to try to refinance.
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 Service Members Civil Relief Act. The ABA has a network of attorneys that will work with Service Members in relation to qualifying for relief.
If qualified, will lower payments on all consumer debt in addition to mortgage payments.
Must be active military to qualify.
This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please call us today for a free confidential evaluation of your individual situation, property value and possible options.
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