Matt Anderson properties firmly believes that you have a right to know all of your alternatives to foreclosure.
Option 1: Loan Forbearance or Loan Modification
A strategy worth pursuing is called a loan forbearance. The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period. A typical example: “You owe $9,000 in back payments, attorneys fees, etc. Your mortgage company may accept $4,500 now and $750 per month for the next 6 months. Of course, you would have to resume making your normal monthly payments. A loan modification is a permanent change to your mortgage that may lower your payments and the delinquent payments may be added to the mortgage balance. A loan modification or forbearance is easier to arrange prior to the Mortgage Company filing a foreclosure lawsuit. Some lenders will not consider this after filing, but it’s worth trying.
Option 2: Sell Your Home on the Open Market
This is probably the most under-utilized option available to you. The fact is selling your home will give you the most money in your pocket. The market is very active, especially in Charleston. Your home may be worth more than you think!
Option 3: We Can Buy Your Home
If efforts to save your home have been unsuccessful and time doesn’t permit selling your home on the open market or you just don’t want to, but want a quick sale with no problems, call us. Our network of investors can make you a cash offer and close quickly (usually within 14 days). And of course, if you need additional time to relocate, that can easily be arranged.
Option 4: Reinstate Your Mortgage
You have up to and including the morning of the auction to catch up your payments. Perhaps you could borrow from friends or family, credit cards or retirement program. You may be able to arrange a second mortgage to catch up the back payments and fees. Check in the Yellow Pages under “Mortgages”. There are a number of companies listed that claim they can help in these situations.
Option 5: Refinance
You’ve probably received letters from mortgage brokers and lenders saying you are already pre-approved for a new mortgage. The fact is that is very difficult to arrange new financing when you’re already in default on your existing mortgage. Be very cautious about sending advanced fees of $300.00 to $600.00 to lenders or mortgage brokers. Usually it’s a ploy to take advantage of your financial situation.
Arranging new financing will depend on your income, credit report, value of your home and the amount of your equity. If you’re not sure of the value of your home, give us a call. Typically, our team can give you a fairly accurate estimate of value within hours. We would be glad to help and of course, there’s no obligation. If you attempt to refinance, you should always have a backup plan available to you. Many times, we’ve have had homeowners call days before the auction saying their financing did not go through, and at this point it’s too late!
Option 6: Chapter 13 Bankruptcy
A viable alternative if your financial situation has improved, filing bankruptcy prior to the auction will stop the sale. Unfortunately for most people, it only postpones the sale for one or 2 months. Immediately after filing a Chapter 13 Bankruptcy, you will have to file a repayment plan with the courts. This plan has to show that you have sufficient monthly income to pay basic living expenses such as food and utilities and other monthly payments such as credit cards, car payments etc. In addition, your income must be sufficient to resume making your monthly mortgage payments. All past due amounts are usually spread out between 24 and 60 months i.e. If you owe $9,000 in missed payments, attorneys fees, etc. if spread out over 48 months would be an additional $187.50 due each month to the court appointed trustee. If you feel as though you have the income to immediately begin repayment of all your debts and the courts agree, this may be a good choice for you to save your home.
Over the years, we’ve spoken with many individuals who filed for bankruptcy protection only to have their cases dismissed. Not only were they out their attorney’s fees (usually $1,000 – $2,000) but now had a bankruptcy and foreclosure on their credit report. Bankruptcy is considered an action of last resort.
Option 7: Mater-In-Equity Auction
By far, the worst option available to you! Many people feel “I have no equity, let the bank take it”, but homes that are sold on the courthouse steps typically sell between 50% and 70% of their fair market value. Moreover, if a bank suffers a loss due to the pending foreclosure action against you, they also have an option. They can file a deficiency judgment against you and pursue you for the amount of their loss.