How to Avoid Foreclosure

There are many options available to help Homeowners struggling to maintain their mortgage payments. It is imperative that you contact an experienced Short Sale REALTOR® to assist you with these options. The worst thing you can do is to walk away from your home and not do anything. There are experienced professionals willing to help you for minimal to no cost. 

If you find yourself in a financial hardship and unable to meet your mortgage obligations, please contact Rebecca Keeney, REALTOR® for a confidential consultation.   

Loan Modification Programs:

If you are not eligible for a refinance, reinstatement, repayment, or forbearance plan based on the information you provided to your Lienholder(s), and you wish to keep your home, you may be interested in pursuing the Home Affordable Modification Program (HAMP). If you are not eligible for HAMP, you will be evaluated for a non-HAMP Fannie Mae loan modification. This is for Homeowners that were financed with non-VA loans. HAMP is part of the Making Home Affordable program (MHA), which was established in conjunction with the Hardest Hit Fund program (HHF) under the Troubled Asset Relief Program (TARP), and an extension of the Emergency Economic Stabilization Act of 2008. HAMP was designed to help struggling homeowners avoid foreclosure by modifying the terms of their loan to a level that is manageable. This provides the borrower with a more affordable payment by adjusting their interest rate, extending the term period, and reducing or forbearing the principal amount.

Home Affordable Modification Program (HAMP) along with the entire Making Home Affordable Program is set to expire December 31, 2016. The last day to submit your application with the modification effective date must be on or before September 30, 2017. The Hardest Hit Fund (HHF) has been extended to 2020.

If you are in the military or are a Veteran and have a VA Loan – you may be able to qualify for the VA Interest Rate Reduction Refinance Loan (IRRRL), commonly known as the VA Streamline Refinance, lowers your interest rate by refinancing your existing VA home loan. Not only can you lower your interest rate, you may be able to extend the terms of your loan (for example if you have already paid for 10 years of payments, they can extend out for another 30 year mortgage) thus lowering your overall monthly payment. Most of the VA IRRRL, depending on the Lender you choose, do not require an appraisal. So, if you find yourself in a negative equity situation and do not wish to proceed with a Short Sale and want to keep your home, this may be a viable option for you.

The program allows you to refinance your VA loan without having to furnish the documentation typically required by a bank or mortgage company, including income and employment verification, bank statements/paystubs and credit score verification, and an appraisal of the home. This option is only available to military and veterans who are refinancing a VA loan.

Military, Veterans and the VA IRRRL:

If you are in the military or are a Veteran and have a VA Loan – you may be able to qualify for the VA Interest Rate Reduction Refinance Loan (IRRRL), commonly known as the VA Streamline Refinance, lowers your interest rate by refinancing your existing VA home loan. Not only can you lower your interest rate, you may be able to extend the terms of your loan (for example if you have already paid for 10 years of payments, they can extend out for another 30 year mortgage) thus lowering your overall monthly payment.

Most of the VA IRRRL, depending on the Lender you choose, do not require an appraisal. So, if you find yourself in a negative equity situation and do not wish to proceed with a Short Sale and want to keep your home, this may be a viable option for you.

The program allows you to refinance your VA loan without having to furnish the documentation typically required by a bank or mortgage company, including income and employment verification, bank statements/paystubs and credit score verification, and an appraisal of the home. This option is only available to military and veterans who are refinancing a VA loan.

In order to qualify for a VA Loan, a veteran must have served 181 days during peacetime, 90 days during war time, or 6 years in the Reserves or National Guard. You may also qualify as the spouse of a service member who was killed in the line of duty.

Other qualifications include:

  • Be current on your mortgage with no more than one 30-day late payment within the past year.
  • Your new monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. (Except when refinancing an ARM to a fixed rate mortgage.)
  • You must not receive any cash from the IRRRL.
  • You must certify that you previously occupied the property.
  • You must have previously used your VA Loan eligibility on the property you intend to refinance. 

Are there options in lieu of a Short Sale?

Of course, there are a variety of programs available to help you resolve your delinquency and keep your home.

You might be eligible to refinance your loan and may be able to lower your interest rate and thus your monthly payment amount to more manageable terms. Some Refinancing programs do not require an Appraisal. Ask your REALTOR® to review these options if you wish to keep your home. And in most cases, you can skip 2 months of payments allowing you to catch up on other delinquent accounts/bills.

You may be able to qualify for a temporary or permanent loan modification. The terms of your mortgage are then “modified” which may include a reduced interest rate thus lowering your monthly payment. If you can tolerate the terms for 3-4 months during a “Trial Period” – often your primary Lienholder will allow for a more permanent and manageable solution.

You may qualify for a reinstatement if you can show that you will get a large sum of money on a p[articular future date – this is often used to avoid foreclosure. You can request a forbearance plan where you can make reduced mortgage payments or no mortgage payment for a specific period of time.

You may qualify for a repayment plan. This is where your total past due amount is divided into several payments that get added to your regular monthly payment and allows you to become current without having to put down a lump sum of money. In some cases, your delinquency can be added to the backend of the loan allowing you to start over.

If you do not wish to keep your home, and cannot sell for what you owe the Lienholder(s) – you can request the Lienholder(s) permission to proceed forward with a Short Sale. In some cases, relocation assistance can be provided to assist you in transitioning into your next home.

As a last resort, you may want to consider a Deed-in-Lieu of Foreclosure. A Short Sale is always a better option than this, but when this is your only option, it is far better than walking away and allowing your home to foreclose. Important to note – you must not have multip0le liens. And relocation assistance may be available upon request on a case by case basis.

© 2001 - 2015 Reliance Network and Berkshire Hathaway HomeServices Towne Realty. All rights reserved. US Reg. Copyright TX-5-910-991, TX-5-910-992, TX-5-910-993, and TX-5-910-994. © 2015 An independently owned and operated franchisee of BHH Affiliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of HomeServices of America, Inc. ® Equal Housing Opportunity . Berkshire Hathaway HomeServices Towne Realty is an affiliate of Towne Bank.

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