Stop Foreclosure - The Loss Mitigation Alternative
If you find yourself facing foreclosure, there are probably several contributing factors, which have led to your situation. You might have lost your job, suffered an illness (and its accompanying medical bills) or been through a divorce. However you get here, one thing is certain; the bills are piling up and it is getting harder and harder to make ends meet. Even worse is the situation of having an adjustable rate mortgage whose interest rate has skyrocketed, making your payments much larger.
Unfortunately, while you're worrying about stopping foreclosure of your home, you're bombarded with letters, postcards, phone calls and strangers driving by and knocking on your door.
These people are foreclosure investors; they make their money by pursuing homeowners who are on the verge of losing their homes, buying your home and selling it for a profit. They are operating on the assumption that you will have no choice but to sell your home.
While on a surface it may seem like a good idea to sell your home to these foreclosure investors in somecases, but before you do so you should look into the alternatives. Definitely do not sell your home to one of these investors before checking out your other options, such as rearranging your loan.
One of the Solutions To Stop Foreclosure Is Lender Mediation
Once you missed a few payments, your credit report will reflect them, and your credit score will drop dramatically. This low credit score will likely prevent you from being able to get a new loan to refinance your current loan in default.
Every mortgage lender in the country has a Loss Mitigation department established with the sole purpose of reducing lender's losses on loans. They work to put homeowners who fell behind on payments on a repayment plan to bring your loan out of default. The best thing about Loss Mitigation alternative is, unlike a new loan, it doesn't require a credit approval.
A Repayment Plan May Still Be Challenging
Loss Mitigation departments are lightly staffed. One of the biggest problems with workout plans is caused by employee overload. At time of high default rates, like we're experiencing now, the employees have too many files to work on. And they have a limited time to process each case. The result is, the lender offers you a 'canned' repayment plan that has too short of a 'catch up' time and too large of monthly payment increase that is not realistic for your budget to sustain.
Because you're between a rock and a hard place you're tempted to take it to keep your home from being foreclosed on. In reality you just set yourself up for a failure. A few months down the stretch, you'll be back in foreclosure again.
Watch Out When Hiring Workout Professionals To Stop Foreclosure
You may be much better off by hiring a professional to handle the loss mitigation process for you. These companies know the ins and outs of the loss mitigation process and often have strong relationships with mortgage lenders nationwide. They have successfully helped thousands of homeowners stop foreclosure.
These companies will look over your finances and help you come up with a repayment schedule, which is possible for you to meet; payments will be kept as low as possible to make it easier for you to make your payments. These companies have intimate knowledge of the programs offered by different lenders and can negotiate a better deal for you than you would be offered by the lender on your own. They may even be able to negotiate a lower interest rate on your mortgage, which will lower your payments.
You may think in you current circumstances hiring a company like this could be prohibitively expensive. Not so. Most charge a reasonable flat fee equal to a single monthly mortgage payment. You'll easily get your money back through a negotiated for you deferral of the next loan payment.
If Lender Mediation Is Not An Option
What if loss mitigation isn't a possibility for you? Then you may have to go ahead and sell your home to prevent having a foreclosure record on your credit report. Listing your home for sale with a realtor is the best way to go if you have ample time, since you will be able to get a higher price for your home. If you are short on time, you may find that selling to an investor makes the most sense; just try to deal with an investment company, which has the resources to close the deal quickly.
Unfortunately, while you're worrying about stopping foreclosure of your home, you're bombarded with letters, postcards, phone calls and strangers driving by and knocking on your door.
These people are foreclosure investors; they make their money by pursuing homeowners who are on the verge of losing their homes, buying your home and selling it for a profit. They are operating on the assumption that you will have no choice but to sell your home.
While on a surface it may seem like a good idea to sell your home to these foreclosure investors in somecases, but before you do so you should look into the alternatives. Definitely do not sell your home to one of these investors before checking out your other options, such as rearranging your loan.
One of the Solutions To Stop Foreclosure Is Lender Mediation
Once you missed a few payments, your credit report will reflect them, and your credit score will drop dramatically. This low credit score will likely prevent you from being able to get a new loan to refinance your current loan in default.
Every mortgage lender in the country has a Loss Mitigation department established with the sole purpose of reducing lender's losses on loans. They work to put homeowners who fell behind on payments on a repayment plan to bring your loan out of default. The best thing about Loss Mitigation alternative is, unlike a new loan, it doesn't require a credit approval.
A Repayment Plan May Still Be Challenging
Loss Mitigation departments are lightly staffed. One of the biggest problems with workout plans is caused by employee overload. At time of high default rates, like we're experiencing now, the employees have too many files to work on. And they have a limited time to process each case. The result is, the lender offers you a 'canned' repayment plan that has too short of a 'catch up' time and too large of monthly payment increase that is not realistic for your budget to sustain.
Because you're between a rock and a hard place you're tempted to take it to keep your home from being foreclosed on. In reality you just set yourself up for a failure. A few months down the stretch, you'll be back in foreclosure again.
Watch Out When Hiring Workout Professionals To Stop Foreclosure
You may be much better off by hiring a professional to handle the loss mitigation process for you. These companies know the ins and outs of the loss mitigation process and often have strong relationships with mortgage lenders nationwide. They have successfully helped thousands of homeowners stop foreclosure.
These companies will look over your finances and help you come up with a repayment schedule, which is possible for you to meet; payments will be kept as low as possible to make it easier for you to make your payments. These companies have intimate knowledge of the programs offered by different lenders and can negotiate a better deal for you than you would be offered by the lender on your own. They may even be able to negotiate a lower interest rate on your mortgage, which will lower your payments.
You may think in you current circumstances hiring a company like this could be prohibitively expensive. Not so. Most charge a reasonable flat fee equal to a single monthly mortgage payment. You'll easily get your money back through a negotiated for you deferral of the next loan payment.
If Lender Mediation Is Not An Option
What if loss mitigation isn't a possibility for you? Then you may have to go ahead and sell your home to prevent having a foreclosure record on your credit report. Listing your home for sale with a realtor is the best way to go if you have ample time, since you will be able to get a higher price for your home. If you are short on time, you may find that selling to an investor makes the most sense; just try to deal with an investment company, which has the resources to close the deal quickly.
About the Author:
As you can tell, there's more than one alternative to avoid foreclosure of your home. Visit our website to get a referral to a loss mitigation company that can help you avoid foreclosure.
posted by Credit Counseling at
2:36 PM
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