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Foreclosure Prevention

Foreclosure Prevention

Foreclosure is by far the worst outcome for any homeowner in trouble.  Foreclosure is 100% avoidable.  No one has to go through foreclosure unless they choose to do so.  Laws are in place to help and reward homeowners who take action.

There are only really four (4) types of programs available to help homeowners in trouble.  They are in order of qualifying eligibility most difficult to easy:

1.      Refinance – Difficult to qualify for borrowers can only have one (1) 30-day mortgage late or less and a good FICO score.  Property must have equity or be financed with a FHA or VA loan (Streamline Refinance).

2.      Loan Modification – Difficult to qualify for borrowers need to prove they cannot afford current mortgage payments yet do qualify for a new mortgage payments.  Benefits to the homeowner are extended time of ownership during workout period, maintain possession if eligible, and a possible lower payment.  Risks are high principle owed, variable rates and payments, back taxes, continued ongoing compliance requirements from the lender.

3.      Bankruptcy – Borrowers are restricted by the number of times they can file.  Limited capability and benefits as well.  Borrowers primarily still lose their home and have to Short Sale or risk Foreclosure.  This is because bankruptcy only discharges the debt.  Devastating to the homeowners credit typically over a 200-point reduction of FICO score.  Ineligible to buy a property for at least two (2) years or more.

 4.       Short Sale – Easy to qualify for; borrower’s hardship and a qualified buyer are the primary requirements.  Without a question Short Sale provides the most benefit to the borrower.  A successful Short Sale can provide some or all of the following benefits:

  • Extended Time of Ownership.
  • Relocation Money at Close of Escrow (up to $6,000).
  • Tax Exemptions.
  • Debt Relief and Forgiveness.
  • Save FICO Score.
  • Maintain Possession (lease/own)
  • Remain Eligible to Buy Different Property (prior/post).  
  • Bankruptcy Avoidance.
  • Foreclosure Avoidance.

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