What Are A Homeowner's Options When Facing Foreclosure?

Updated: Oct 31, 2018

Your mortgage payment is more than likely the most costly expense in your family budget. When there isn't enough income in the home to sustain the payments, but you've trimmed a lot of your other expenses already, it probably still we be hard to make mortgage payments. This is a situation that shouldn't be taken lightly because failing to make those payments is a lot more serious than missing most other bill payments. When homeowners start missing loan payments, most banks begin to take notice. Usually by the third missed loan payment, the bank will initiate foreclosure. This means the bank will go through the legal process of forcing the sale of your home to redeem the its equity stake. In other words, they will sell your house at a foreclosure sale to recoup your unpaid debt. There are some options available to help you avoid foreclosure and maybe even keep your house.

Forbearance, Loan Modifications, Repayment Plans

One of your first steps you should take is communicate with your lender to try to work something out. To do this, you have to go to the loan servicer and find out how the situation can be worked out. You can probably get a forbearance where you make an agreement with the mortgage lender in which they agree not to exercise their legal right to foreclose on a mortgage while you commit to a mortgage plan that will, over a certain time period, bring you current on your payments. Just explain your situation and why you fell behind and be ready to explain how you will be able to make future payments. You'd be shocked to see how much they are willing to work with you.

Reinstate the Loan

You may have a legal right under state law or by the terms of your mortgage agreement to reinstate (bring current) your loan within a certain time frame after your default. The lender may even agree to let you reinstate, but you essentially have to pay the whole past-due amount on the mortgage, including any missed payments, late fees, and anything else to bring you current. Also, you'll have to pay any cost the bank incurred trying to enforce the mortgage, like court costs and attorneys' fees in its foreclosure action.

Refinance for Better Loan Terms

You can try to refinance and replace your old mortgage with a new one. If you manage to get a new mortgage, this would probably mean a lower interest rate, which in in turn means a lower monthly payment. Also, you can also consider the loan term. You can extend the life of the repayment period from a 15 to a 30 years year mortgage may dramatically reduce your payments. Do your research to find the best interest rates and low closing costs.

Most of the time, you can only refinance if you have equity in your home. You might be able to refinance even if you don't have any equity under the government's Home Affordable Refinance Program (HARP). With a HARP refinance, you may be able to get a lower interest rate, get a shorter loan term, or switch from an adjustable to fixed-rate mortgage.

The HARP program is scheduled to end on New Years Eve 2018.

Short Sale or Deed in Lieu of Foreclosure

To avoid foreclosure, you can apply for a short sale or deed in lieu of foreclosure. A “short sale” is when you can negotiate with a bank who then agrees to let you sell your house to someone else for less than what you owe. If you owe more on the loan than your home is worth, then a short sale might be a good option for you to avoid a foreclosure.

In a deed in lieu of foreclosure, the bank will agree to take a deed to the property instead of foreclosing. (Learn more about short sales and deeds in lieu of foreclosure.)

Sometimes, the mortgagor (you the borrower) won't be liable for a shortcomings after a short sale or deed in lieu of foreclosure, but if you owe a lot more than the home is worth, you'd most likely have to pay a deficiency judgment. This is a ruling made by a court against an individual who defaulted on a secured loan, indicating that the sale of a property to pay back the loan did not cover the outstanding debt in full. In this case, a lien placed on the debtor for further money.

Equitable Redemption

You have the right to get your house back at any time after default, but before your home is sold at a foreclosure sale. This is only possible if you pay off the mortgage debt in full, plus any damages the bank suffered as a result of your nonpayment, like collection fees, court costs, and attorneys' fees in its foreclosure action. If you manage to redeem, the house would be 100% yours at this point.

Statutory Redemption Is Different

The equitable right to redeem is different from statutory redemption. In some states, you have the right to buy your home back within a specified time frame after the foreclosure sale.

With statutory redemption, you have to pay whatever price the home sold for at the foreclosure sale including any expenses. The laws that govern Florida foreclosures are found in F.S. 702.01 et. seq. (To learn more about the statutory right of redemption in Florida, see CHAPTER 702 FORECLOSURE OF MORTGAGES AND STATUTORY LIENS.)

Sell Your House To A Cash Buyer

Your best option may be to sell your home while you still have a chance and before you are too deep in the foreclosure process. You can sell your home in a Retail Sale with the help of a real estate agent, or sell it to an Investor for cash in a short amount of time.  Selling your home in a retail sale works best if your house isn’t in need of any major repairs, homes are selling fast in your area, and you have time to wait for it to sell.  If your house is in good condition you may be able to recover some of your equity, but if not, the time and money required to sell your home by listing it with a real estate agent may not be your best option. When selling to an investor, you typically don't need to make any repairs on the property, you can sell for cash (no waiting for a retail buyer to qualify for a loan)  and usually close within a week. This is the may be ideal for someone who needs to move quickly to prevent a foreclosure.

If you’re already struggling with foreclosure, it’s likely that you’re being contacted by lots of investors promising you fast cash for your home, and you’re probably wondering “Who are all these guys?” - and you are right to be concerned about disreputable people who aren’t able to actually buy your home.

Offer Me Cash® is a full service real estate investment firm. We can buy your house fast for cash and even help you in situations where your house doesn't have equity.  We’ve helped several of property owners just like you and we can help you get on with your life after facing foreclosure. Contact us  305-930-3945 - never call someone with a hand written sign at the side of the road - you never know who you’ll get..  

In cases involving foreclosure, time is of the essence. Don’t let this situation haunt you and your credit report for years to come. Work with the official “Offer Me Cash” and let us help you save your home before it’s too late. Call us today to get a no-obligation cash offer for your property.

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