How Do You Stop the Foreclosure of Your Frederick Home?
If you or someone you know is facing the possibility of foreclosure, you need to find out what your options are. There are several strategies that a distressed property owner might be able to persue.
Reinstatement: If the reason payments were missed is temporary and has been resolved then you probably will have the option to reinstate the mortgage right up to the bank sale. Depending on the state you are in, the laws vary as to how long you have to reinstate the mortgage. With the recent crisis in mortgages, over 22 states have updated their forclosure laws. In April of 2008 Maryland passed updates to their foreclosure law:
SB 216/HB 365
"Establishes a longer time frame before properties may be sold at foreclosure sale, and requires greater disclosure to consumers about their rights and options. Under the law, a foreclosure action could not be filed with court before 90 days after a seller is in default. The property could not be sold at a foreclosure sale for another 45 days after that time. The law also requires that the mortgage originator license number or affidavit be attached to the recordable instrument."
Forbearance or Re-Payment Plan - If the reason payments were missed is temporary and you are not able to make a one-time payment to catch up, you may be able to negotiate a forbearance or repayment plan. The lender may allow you to pay the missed amount over a period of time, which is more likely, or they may attach the missed amount on the end of the loan. Income documentation is required to show that you will be able to make the payments.
Sell the Property - If you have equity in the property you can sell it and avoid foreclosure. Your agent needs to understand the foreclosure timeline in Maryland to help you price the home appropriately. Make sure you still order payoffs and a title search, it is possible that a prepayment penalty on the payoff oor a lien on the property could eliminate any equity you have. In the present market with declining values, there may not be any equity in the property.
Rent the Property - If your payments are low enough, you may be able to rent the property for enough to keep up with the payments. This is often a short-term solution since taxes and insuranc payments need to also be paid when due. If they are not paid, the mortgage company will force place an escrow account on the property, which will cause the payments to go up and it is very possible that you will end up in the same situation as before.
Refinance - If you have suffficient equity and income and your credit is not damaged you may be able to refinance. Again, this is usually a temporary solution since the payments will go up consideralby. This will work when the issue that made you late in the first place is resolved.
Mortgage Modification - A loan modification is very similar to a lower interest refinance where the lender lowers the interest rate on the existing loan in order to lower the payments. If your lender offers this option it is a great option and you will have to qualify for a modification by sending in proof of income and expenses.
Deed-in-Lieu of Foreclosure - The mortgage company agrees to take the deed back in exchange for the property. This happens infrequently and until this present market was unheard of.
Bankruptcy - A bankruptcy may stop a foreclosure and allow you to reorganize your debt and keep the property. Most of the time the bankruptcy only stalls the foreclosure. The drawback is that it makes it very difficult for the property owner to sell once he has entered the process. It makes it nearly impossible to negotiate a short sale.
Servicemembers Civil Relief Act (SCRA) - A bill that was signed into law in December 2003 which provides protections to servicemembers in specific situations.
Short Sale - When a homeowner is short, they owe an amount that when combined with closing costs and commission is higher than the current market value. You may be able to negotiate with the mortgage company to accept less than the full balance of the loan at closing. The property is "sold short". With a short sale, the agent must have experience and training to properly package the listing and sale so that the property will be sold.
Chris Highland is a Certified Distressed Property Expert, CDPE, a nationally recognized certification that enables him to provide the best service to those facing possible foreclosure. Please don't hesitate to call or email if you, or someone you know is having trouble making their mortgage payments. We may be able to help you avoid foreclosure.
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The Highland Group - Real Estate Teams
Chris & Karen Highland
Frederick County MD Real Estate Agents
Specializing in Frederick County Real Estate
301-831-9947
Real Estate Teams, LLC
isell4u2@msn.com
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