You Just Got a Foreclosure NOTICE!

Break down your options and where to start.

If you’ve gotten a foreclosure notice, or if you’re currently in foreclosure, let’s break down what this looks like and what options you have to avoid foreclosure.

So first of all, I want to acknowledge, I know this is super overwhelming and you are not alone.  We have seen an increase in Foreclosures this last year, most homeowners in foreclosure right now either just bought the house in the last couple of years, or fell behind because of the pandemic and now are facing financial hardship and facing foreclosure.

I’m only a couple months behind!

If you are only a couple months behind you are in a position where you are NOT losing equity to the bank, but you should understand that the further you fall behind, not only the less options you have, but every month that you don’t pay, they charge you interest and late fees and ALL of that is YOUR money and YOUR equity!

I have seen payoffs almost double in just a couple of years from all the fees that they’re allowed to charge. So,  I want you to keep that in mind in whatever you decide to do.  Have a sense of urgency, because I don’t want you to lose YOUR money to the bank.  They don’t deserve your equity. You need to protect as much as you can.

First option: Forbearance.

Forbearance is essentially a “pause” on your mortgage payments and allows you to buy time to be able to pay. This is intended for SHORT TERM hardships and will avoid any foreclosure proceedings.  Now, it’s important to understand that the forbearance option is only effective if you have a way of coming up with the funds as you will owe ALL the missed payments when the forbearance period is over.  

If you do not have a way of coming up with two to three months of payments that you can pay all at once, then the forbearance is just going to buy you time.  It’s not actually going to help you in the long run. They’re not going to charge you interest or late fees, so if you’re just starting to fall behind, I would call your bank and ask them to put you in forbearance as you come up with a strategy.

Here’s the key. In order for this to work, You have to do something. You have to either have the income where you’re able to pay that large sum, or you’re putting the house on the market to sell so that you’re not getting penalized for not paying. They’re not escalating the loan and putting it in foreclosure, but you’re getting out of the loan to get them paid.

In order to determine if forbearance is right for you, you need to determine if you have a temporary hardship or this is a long term hardship, and time is not going to change your circumstances financially to be able to pay in full.

Second option: Loan Modifications

A loan modification is where your mortgage lender agrees to adjust your loan so that you don’t have to pay all of those payments at once. They have a couple ways to do this.  You will have to contact your lender and write a hardship letter explaining why you fell behind and prove that the financial trouble is temporary and you can start paying your mortgage again.

You have to prove that you can actually afford the loan.  A lot of times people make the mistake of thinking that a loan modification is adjusting your loan to reduce the payments and that’s not the case at all.  The lender is going to look at your situation and say, okay, if this person is behind, can they start paying again? This is why they request all your financials to verify you make at least 3 times the amount of your mortgage and that your debt is not higher than your income.

Now there’s always a risk with a loan modification that they actually raise your interest rate or they take all of those payments and they put it on the back of the loan.  So whenever you’re considering a loan modification, here is the MOST IMPORTANT advice you will ever get… Look at the terms before you sign anything!!

Some terms that they offer in order to make your loan current are not always a good deal. They might put you in a worse situation.  For example, They could extend the loan term to 40 years, or change your interest rate to the current rates where you now have a higher mortgage payment!  

If you do not have income, or your hardship is a reduction of income, please understand the mortgage lenders do not “pre qualify ” you. They will review all the paperwork you submit and then make a decision based on temporary financial difficulties.  

If you need help or have questions, we are happy to review this with you so you do not waste time and miss more loan payments, as it can be VERY frustrating going back and forth with a mortgage company over your financial package and trying to figure out the process.

You can reach us here on the website www.abound-res.com or call us at 919-239-1980.

Now if are a homeowner with an upcoming foreclosure date:

The priority is to get the Foreclosure process stopped immediately!.  There is no repayment plan options available at this point and the lender needs time to review any options to keep your home.

The key here is to ACT QUICKLY.!

There are different ways to stop foreclosures and this is something we help homeowners with at no cost.

Reach out to us here: 919-239-1980 or through our website contact page http://abound-res.com/contact/  so we can discuss your situation and how we can help:

Regardless of what you end up doing, just remember, once you have a financial setback and fall behind on your mortgage payments, the quicker you act, the fewer fees and more options you will have.