Foreclosure Alternatives
Home Affordable Foreclosure Alternatives are programs and services that are designed to keep people in their homes. Some of these programs include Short Sales, Deeds in Lieu of Foreclosure, and the
Treasury/FHA Second Lien Program (FHA2LP).
Short sale
Short sales may be a cheaper and easier way for distressed homeowners to get their house back on the market. They may also allow a borrower to stay in the home they already own.
It’s a good idea to check with your mortgage lender before you decide on a short sale as a viable alternative to foreclosure. Your bank may have the ability to expedite your loan application, or they may be able to provide a loan for you to purchase a home.
Although a short sale is not without its challenges, it can be an excellent way to save your credit and avoid a devastating foreclosure. As long as you can get all of the lenders to agree to it, it will work out well for you.
There are many steps involved in the short sale process, from finding a prospective buyer, creating a short sale proposal, and working out the finer points with your lender. It may take as long as three to 12 months to close a sale.
While it’s unlikely that you’ll win the lottery, you may be able to buy a new home and get back on your feet in no time. If you’re struggling financially, it’s smart to keep your expenditures in check and avoid splurging on non-essentials.
For example, did you know that a loan modification is actually the less expensive way to make your mortgage payments? The program is offered by the Federal Housing Administration (FHA) and can help current mortgage borrowers apply for a new mortgage.
The short sale is a complex process and the buyer and seller have to be prepared for a few bumps along the way. For a successful sale, you’ll need to pay attention to the details, including liens on the property.
Fortunately, you can make a short sale happen with a little research and a lot of diligence. You’ll need to find the best deal and do your homework.
The most important thing to do is to make sure your short sale offers a reasonable price that matches the home’s true value. Doing so will make it easier to get all of the lenders to approve your offer.
Deed-in-Lieu of foreclosure
One of the best options available to homeowners who have fallen behind on their mortgage payments is a Deed in Lieu of Foreclosure. This is a legal contract between a distressed homeowner and a lender that transfers title of the home in exchange for the lender forgiving the unpaid balance on the borrower’s loan. This is a good option if the lender is willing to make a fast sale of the home for less than the remaining balance.
The deed in Lieu of Foreclosure is usually the last resort. While the lender may be willing to accept this type of deal, they may also be unwilling to put forth the effort necessary to make the sale. The aforementioned effort can include the hefty costs of preparing the home for sale, the sunk costs of a pending sale, and the time and money it would take to sell the home at a brisk pace.
The Deed in Lieu of Foreclosure has several advantages for the lender. In addition to saving the hapless homeowner from an unwanted eviction, it also allows the lender to keep the homeowner on their property. In fact, some lenders may even lease the property to the owner while the foreclosure process is still in progress. This is a good option for a financially strapped homeowner whose credit is damaged by the negative consequences of being foreclosed.
In addition to the financial and emotional benefits, the Deed in Lieu of Foreclosure can also improve a borrower’s credit score. This is because the deed in Lieu of Foreclosure will be reflected in the home’s ownership and credit history. This is especially true in the case of a single-family home. If the lender has the resources, the deed in Lieu of foreclosed property can be refinanced with an easier to qualify mortgage.
In conclusion, while the Deed in Lieu of foreclosed entails some major sacrifices, the result can save the hapless homeowner from years of hardship. However, if the borrower is in a dire straits, it is wise to consider all of the alternatives before making a final decision.
Treasury/FHA Second Lien Program (FHA2LP)
The Treasury/FHA Second Lien Program (FHA2LP) Home Affordable Foreclosure Alternatives Program helps borrowers who have an FHA-insured mortgage to avoid foreclosure. Under this program, you can refinance your home into a first lien FHA loan and receive a reduction of your mortgage debt. However, you must meet certain conditions to qualify.
The program is available to homeowners who have FHA-insured mortgages that are currently in negative equity. You must also have a monthly mortgage payment that is more than 31 percent of your gross monthly income. The amount of your mortgage must be equal to or greater than 115% of the home’s current market value.
There are other programs that you can qualify for to avoid foreclosure. You can also work with the HUD Office of Housing Counseling to find a solution. The Making Home Affordable Program is a comprehensive strategy to help struggling homeowners get more stable loans. You can also seek assistance from a nonprofit agency like Hope Now.
You can also apply for the FHA Short Refinance Program. This program is designed to help borrowers who have negative equity on their mortgages and who can afford to pay off their mortgages.
You can also use the Principal Reduction Program. This federally-funded program provides mortgage payments relief to qualified homeowners who are experiencing a 15% drop in their income.
You may also be eligible for the Special Forbearance for Unemployed Homeowners Program. This program offers an interest-free Housing and Urban Development loan of up to $50,000. Typically, this program is used in conjunction with a short sale. You can also take advantage of the HAFA Short Sale Program, which allows you to transfer your title to a deed-in-lieu of foreclosure.
If you are facing foreclosure, you can work with your lender to come up with a plan. You should also check out the US Treasury Department’s Home Affordable Foreclosure Alternatives program. You can apply for a short sale and work with your lender to find a solution.
There are other programs that you can apply for to get your mortgage payments reduced. You should also seek advice from the HUD Office of Housing Counseling to see how you can work out a compromise with your lender.
If you like what you read, check out our other articles
here.
