7 Common Options to Avoid Foreclosure
There are a few common loss mitigation options available to distressed owners of Gwinnett County Property that may protect their equity and save their homes from foreclosure.
Foreclosures have been on the rise in the U.S. lately, and while Metro Atlanta is not currently among the cities most affected, that could soon change. We all like to be prepared for hardships, including those that put home ownership at risk, but how does one plan for a sudden job loss, illness, or other catastrophic event? Unfortunately, some of our former neighbors lost their homes to foreclosure, presumably because they didn’t know their options during a disastrous financial hardship. They may also have left behind thousands of dollars in badly needed equity, which could likely have easily been converted into cash through a sale.
How Loss Mitigation Options May Help Gwinnett County Property Owners Avoid Foreclosure
This article provides an overview of seven common loss mitigation options available to homeowners to help them preserve their equity during a difficult season when informed decisions must be made about continued home ownership.
If you're behind on payments, you may notice people driving by to take photos of your home, or notes attached to your door asking you to call the loan servicer. The loan servicer may want to make you aware of your loss mitigation options. Loss mitigation is a collaborative effort between a distressed borrower and their loan servicer to develop a plan that prevents foreclosure and allows the homeowner to retain or gracefully exit their home. Loan servicers are compelled to evaluate burdened borrowers for these options before a foreclosure can proceed. Most of the available options depend on the type of loan in delinquency and the borrower’s preference for either retaining the home or exiting it gracefully.
Retention Options to Avoid Foreclosure:
A Forbearance Agreement
This is a temporary arrangement that allows the borrower to pause or reduce monthly payments for a short period due to a temporary issue, such as a job loss.
Loan Modification
This describes a permanent change to the terms that may extend the mortgage term, lower the interest rate, reduce the principal balance, or combine two or more of these options to make payments affordable.
A Repayment Plan
This option spreads the past-due amounts over several months and adds them to the regular monthly payment.
A Partial Claim
Typically used with FHA Mortgages, this arrangement places the past-due amount into an interest-free subordinate lien that is repaid only when the property is refinanced or sold.
Gracefully Exiting to Avoid Foreclosure:
Deed-in-Lieu-of-Foreclosure:
In a deed-in-lieu-of-foreclosure arrangement, ownership of the property is voluntarily transferred to the lender in exchange for canceling the debt without going through foreclosure.
Short Sale:
A potentially ideal solution for a new homeowner with little to no equity, a short sale allows the borrower to sell the property for less than the remaining mortgage balance. The arrangement usually covers the owner’s customary selling expenses, and the lender agrees not to pursue the borrower for the difference between the selling price and the mortgage balance.
Traditional Sale:
Owners typically get no cash from deed-in-lieu-of-foreclosure or short-sale options. But they may sell the home through a traditional sale and possibly walk away with their equity converted into cash.
Find out about your Eligibility for Foreclosure Loss Mitigation
So, how does one learn more about and take advantage of the options available to them? If issues arise around your ability to meet your mortgage obligations, call your loan servicer—not the unlicensed investors who advertise all over the media or anyone else. The loan servicer has been trained on and will have been involved in similar situations with other borrowers. You will not be the first to call about hardship, and they will likely have the information you need to decide on the best next steps. They’re often compassionate, rarely condescending, and will, in most cases, demonstrate an interest in reaching the best mutual resolution. You should also consider post-purchase housing counseling to learn more about other options.
Find a List of Local Housing Counselors.
Find a HUD Certified Housing Counselor in Metro Atlanta
- The Department of Housing and Urban Development (HUD)
- Georgia Department of Community Affairs
- Consumer Finance Protection Bureau
Here’s what you can expect when you call Your Lender about Avoiding Foreclosure.
When you call, the answering or outgoing message may announce several times that the call is an attempt to collect a debt, that it is being recorded, and that any information provided may be used in that pursuit. Don’t be intimidated by that. Simply request to speak with the loss mitigation department, tell the representative that you would like to keep your home, and explain the situation that either led to an existing mortgage delinquency or that will likely soon lead to one. Then ask for the payoff amount, if your mortgage is guaranteed by Fannie Mae, FHA, Freddie Mac, USDA, or VA, and learn the options available to you under that guarantee. The representative may send a loss mitigation package and ask that it be completed and returned with your notarized signature. They’ll review the package, contact you with an answer, and if approved, send another document for your notarized signature to establish the agreement. Please keep copies of everything sent, along with detailed notes on all interactions with the loss mitigation department, including call dates and times, instructions, names, phone numbers, and other relevant details. By following these steps, you will demonstrate a willingness to cooperate and be on your way to avoiding a lengthy and unnecessary financial catastrophe.
Now, if your mortgage is 60 days delinquent or more, or you’re already in foreclosure and haven’t decided on a work-out plan, time is of the essence. Please call your loan servicer, or at least call me at (770) 271-2156 with your mortgage balance. I’ll provide an estimate of what your home may be worth and a net-to-seller worksheet, so you have a realistic idea of the amount of money to expect after a sale. I’ll answer your questions and let you go so that you can review everything and decide. But please don’t take my silence as disinterest. I’m available and usually willing to join local distressed homeowners in finding solutions to this problem while they can still make decisions.
A Real Estate Agent Helping You Keep Your Home?
So why is a real estate agent writing about keeping your home, rather than selling it? Well, I’m not only a real estate agent. I am a former state-certified affordable housing counselor with experience in loss mitigation, and I don’t believe the owners would walk away from that kind of money if they knew how to access it. The sellers among them paid all agreed-upon expenses associated with the sale from their proceeds at closing, so there were no upfront, out-of-pocket expenses. They used the remaining proceeds after closing to pay movers to pack and move their belongings from the property, and to pay a cleaning company to clean and prepare the property for the new owners. In the end, those sellers preserved their equity, saved their credit histories from serious harm, and protected neighborhood values. The payday was pretty awesome for those who sold, too.
I am no longer certified as a housing counselor, nor am I a lawyer or financial advisor, so please consider this information my opinions only and verify it with a trusted advisor. Please use the links above to find a certified housing counselor.
Wrapping Up: How to Avoid Foreclosure
The best way to avoid foreclosure is by reaching out to your loan servicer. Before simply abandoning the property or doing nothing, which could leave you with a lot of money on the line, please call to learn about loss mitigation options that may be available to you.
If you find this content helpful, please click the like button on the post and share it with others. You never know who is suffering in silence. It’s not exactly something that people enjoy talking about. And please contact me if you’ve decided to sell your Gwinnett County Property or know someone looking for assistance with selling theirs.
 | Drake Realty, Inc. Solomon Greene |
