Great Day For Real Estate
This is a primer for real estate. It will be most helpful for new buyers and sellers but will serve as a thoughtful common sense place for those more experienced in real estate.
Recently, we were asked what options a homeowner had once they have received a Notice of Default (pre-foreclosure) from their lender. But before you start doing your research on your options you need to make a decision: whether you want to stay in your home or if you have had enough and want to get out.
If your decision is to stay in you home the following are your options:
You can come up with the cash to bring the loan current. Since you are already behind and you will need to pay the total amount past due and all interest and late fees associated with the loan, this might be next to impossible. This option is your legal right to do within 90 days of your receiving the Notice of Default. The lenders are more flexible in their negotiations in this current economy but you will need to show your ability to maintain the loan after the agreement on how to repay the funds. Most of the time, you might be able to arrange an increase in monthly payments until the loan is back to current status. This repayment schedule will be for a short period of time i.e. 12 or 24 months. Always remember this option will require you to show your ability to make the additional amount plus your regular monthly payment. Because of the times, the lenders may be more lenient but they are still going to make a business decision and that is “Over time is this going to be a good loan for us?” You need to do the same thing.
The second option, and the most viable option, is to work with your lender on a “forbearance plan”. If you are still able to make mortgage payments but the payment amount has become too great for you to continue this plan might work. A forbearance plan with the lender is a formal written agreement between you and the lender. The agreement would normally be to reduce or suspend monthly payments for a specific period of time. During this agreement you will either pay only a portion of the mortgage payment or not make any payments at all. You will be required to start making your regular monthly payment as well as pay any additional funds to make up the past due amount upon the expiration of the agreement. Basically, you have just had everything deferred until you could afford
to repay the amount due. This option is normally available to you if you have recently experienced a loss in income or illness.
Then, upon completion of either option, the lender will reinstate your loan. The primary difference between the two is the first option brings the loan current by requiring you to bring the financial resources to the lender while the second option has the lender believing that with some relief you will be able to continue on with the loan.
BUT, if you decide not to stay in the home - stay tuned for our post next week.
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