“A full-fledged recovery in the housing sector will likely elude the U.S. in 2012.” — Frank Nothaft, chief economist for mortgage-finance company Freddie Mac
A rising number of foreclosures and a stagnant economy add up to another difficult year for Montana homeowners. If you are one of the thousands of Montana homeowners in danger of losing your home this year, there are alternatives; however, it is essential that you take action NOW to ensure a more positive outcome to the foreclosure process.
Sell Your House/Consider Short Sale
A bank may agree to a short sell because a moderate loss is better than the costs involved with a foreclosure action. Be warned that a short sale does not eliminate the borrower’s liability for the deficiency, which is the remaining balance left on the loan after the home is sold. In order for the deficiency to be written-off by the lender, the homeowner must negotiate it prior to the short sale.
Renegotiate Your Mortgage
It is your right to negotiate a mortgage. Though there are no guarantees that the lender will negotiate, taking a shot at it is better than going directly to foreclosure.
Consider a Loan Modification Program
The Home Affordable Modification Program (HAMP) was designed to enable borrowers that meet eligibility requirements to avoid foreclosure by modifying loans to a level that is affordable for borrowers and sustainable for the long-term. Qualified borrowers who apply and are able to make it through the challenging process may be rewarded by an interest rate reduction, a loan term extension, a principal forbearance and/or a reduction in the actual principal of the loan.
Deed-in-lieu of Foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. This process may reduce the impact of a foreclosure and help you repair your credit sooner than a foreclosure. You may be able to lease your home after completing a DIL if your mortgage is owned by Fannie Mae. A similar leasing option may be available through your mortgage company.
File for Bankruptcy
A Chapter 13 bankruptcy will stop the foreclosure sale that is set on your home and allow you to put together a plan whereby you can pay the missed payments over time.
This option is a strategic default for homeowners who have done the math and determined it non longer makes financial sense to own the home. In this case, a lender is forced to foreclose.
Not sure of your options? Contact James H. Cossitt, Attorney & Counsellor at Law in Kalispell, Montana. Jim has over 25 years of legal experience in the areas of bankruptcy, workouts, secured transactions, UCC, commercial litigation and consumer finance and business law.