If you are a borrower in foreclosure,
there may be some options available to help resolve
the delinquency on your loan other than reinstatement
or payoff. Many lenders have loss mitigation departments
to work with borrowers who are delinquent on their loans.
Some options used by loss mitigation or loan resolution
departments are listed below. Please keep in mind that
approval of any of these alternatives is left to the
sole discretion of the lender. Also, borrowers are frequently
required to provide the following documents for each
borrower on the note to qualify for a workout agreement,
payment plan or loan modification:
- Copies of last year's taxes
- The last 2 paycheck stubs or verification of salary
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The lender enters into a signed agreement
with all of the borrowers on the note to allow the borrowers
to pay the amount of the then current delinquency, in addition
to the regular house payment over several months, until the
loan is current. Generally half of the delinquent amount is
due at the time the workout agreement is signed, in the form
of a cashiers check or money order. A typical payment arrangement
for a workout agreement may be one and one-half times the
regular mortgage payment until the loan is brought current
and regular payments resume. The borrowers and lender typically
stipulate to put the foreclosure proceedings on hold as long
as the agreed payments are received on time. If the payments
agreed to in the workout agreement are not made, the foreclosure
does not start over, but resumes from the point it was placed
on hold for the workout agreement.
The lender will enter into a signed agreement
with all of the borrowers to modify the obligation evidenced
by the note. The modification could add the delinquencies
to the end of the note term; it could adjust the interest
rate or the payment amount.
If you are attempting to sell the property
but have more owing on it than its value, the mortgage company
may accept a payoff that is less than the actual amount owing.
Legitimate arms-length offers that would require a short sale
should be sent to our office to forward to the lender for
its consideration. Merely having an interested buyer or having
the property for sale will not stop foreclosure proceedings.
If you are unable to cure the delinquency
on the loan and would rather surrender the house to the mortgage
company rather than go through the foreclosure process, a
deed in lieu of foreclosure may be an option available to
you. All of the borrowers on the loan must agree to sign the
deed in lieu, which transfers title of the property to the
lender holding the note. The property must be free of other
encumbrances or loans to qualify for a deed in lieu of foreclosure.
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