Facing a foreclosure is one of the worst things a homeowner can experience. Life is unpredictable: one bad life event, such as job loss or an unexpected disability, can cause borrowers to default on their mortgage loans. Homeowners in danger of losing their home should know that the best resource available to them is a foreclosure real estate agent.

Why Homeowners Should Work With a Foreclosure Real Estate Agent

Real estate agents do more for clients than help them sell and purchase homes: they understand how to avoid foreclosure and provide invaluable assistance to their clients. They also have many resources to help their clients, such as assistance programs and recommendations for lenders and foreclosure attorneys. Based on the homeowner’s situation, real estate agents can advise whether they should work with their lender to stay in their home or sell their home to pay off debt.

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Alternatives to Foreclosure a Real Estate Agent Might Recommend

Foreclosure fees are costly for lenders and mortgage servicers– approximately 28% of the mortgage loan–so it’s usually in the lender’s best interest to work with homeowners to avoid taking such a drastic step. The following are alternatives to foreclosure that may help homeowners keep their homes:

  • Refinance

    An excellent option for homeowners who have not yet missed a mortgage payment, refinancing allows a borrower to lengthen the loan duration to lower monthly payments. However, qualifying for refinancing requires a good credit score and sufficient property equity.

  • Reinstatement

    Federal law requires lenders to wait a minimum of 120 days after a mortgage has defaulted before filing for foreclosure. Homeowners who have the necessary funds can pay back any missing payments and late fees before the end of the 120 days to restore their loan.

  • Partial claim

    Homeowners with an FHA loan may qualify for an interest-free loan from HUD to pay off overdue payments. The loan does not need to be paid back until the end of the first mortgage or when the owner sells the home. Homeowners must meet HUD requirements to qualify.

  • Forbearance

    An excellent option for homeowners who expect to be back on their feet soon, forbearance is when a lender agrees to suspend or reduce mortgage payments temporarily. However, the homeowner must meet all terms put forward by the lender to avoid foreclosure action and pay back any missed payments.

  • Repayment plan

    Homeowners can work with their lenders to set up a repayment plan that allows them to spread the defaulted amount of the loan over several future payments until the mortgage is current.

  • Mortgage Modification

    A mortgage modification is an option for homeowners facing a long-term hardship yet can still afford part of their monthly mortgage payment. During a modification, the lender agrees to lower interest rates, extend payments, and roll past due payments back into the mortgage. An attorney may be needed to mediate on behalf of the homeowner, as lenders are usually reluctant to agree to mortgage modifications.

  • Payment Forgiveness

    Although a rare occurrence, some lenders are willing to forgive a missed mortgage payment.

How Realtors Can Help Homeowners Who Are Unable to Stay in Their Homes

If a homeowner is so financially distressed they can no longer stay in their home, it’s crucial they take action to avoid foreclosure. A foreclosure negatively impacts credit scores and remains on an individual’s credit report for seven years–which can prevent them from purchasing a home within that time. The following two options are ways homeowners can avoid having a foreclosure on their credit report:

  • Short sale

If the home is “underwater” or is valued at less than the amount left on the mortgage loan, the lender may agree to a short sale. All proceeds from the sale will go to the lender, and any remaining loan balance will be forgiven or paid back as new debt.

  • Deed in lieu

Homeowners who don’t want to deal with a short sale can transfer the house deed to their lender to be released from the mortgage contract. Even if the home is underwater, the lender will usually agree to forgive any remaining debt on the mortgage.

Are you facing possible foreclosure, or have you already been foreclosed on? At Casa Real Properties, our expert foreclosure real estate agents can help you explore all options–including assistance programs, lenders, and attorneys–that may help you keep your home or avoid foreclosure on your credit report.

Contact us today to speak with our experienced foreclosure real estate team.

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