I'm having a hard time making payments...

What are my options?

Usually when clients call me regarding my services, they have missed a few payments and they are in various states of the foreclosure process. I will try to explain what can be done to avoid foreclosure.

They are only a few options and here is a quick list:

1. Reinstatement-This where the homeowner reinstates the mortgage by paying up all missed payments and
fees and becomes current with the mortgage. After all the fees have been payed up then the homeowner can
continue to pay the mortgage payments as they had.
2. Forbearance-More commonly known as a re-payment plan. Allows the homeowner to negotiate a re-payment
of missed payments and fees to reinstate the mortgage.
3. Sell The Property-If there is equity in the property then the home can be sold and the foreclosure can be
"cured" thus avoiding the foreclosure.
4. Rent The Property-The property can be rented however the mortgage must be made current. A rental
agreement will not stop the foreclosure process.
5. Refinance-If the credit rating hasn't been too badly damaged, a refinance may help especially if the monthly
payments can be reduced.
6. Deed-in-Lieu of Foreclosure-Commonly known as the friendly foreclosure. This involves for the bank to agree
to foreclose and take the property back without the lengthy process. This is not recommended for properties
with equity because the owner gives up the right to the property and any equity. This option is technically still a
foreclosure and will show up as such on your credit report. Sometimes the bank will forgo any other recourse
but that will also have to be negotiated.
7. Bankruptcy-Can not avoid the foreclosure but may allow the owner to reorganize debt. It rarely stops a
foreclosure it usually only stalls it. Another drawback is that it makes it difficult to sell the property and almost
impossible to negotiate with any third parties.
8. Short Sale-When the homeowner owes more than the property is worth, a sale can be negotiated and
an approval obtained from the bank to accept an amount less than is owed.

Most of these options involve negotiation with the bank and a decent credit rating. If the credit has been affected already, then the only real option that can help is the short sale. In my experience when homeowners use the other options available, they wind up in the same predicament a fews months down the road because the underlying cause of their situation was never resolved.

Also important to note-they are only two things that follow you for the rest of your life, a felony conviction and a foreclosure. True after 10 years it will drop off your credit report, however almost every lending institution has the magic question-Have you ever had a foreclosure? If you've had one you must answer yes, answering no could be considered fraud and that would open you up to a host of other legal problems.