Forebearance

It is not too late to explore your options.

We regret to find people who are facing foreclosure today. We ask that you do not give up!

Once a foreclosure becomes a public record and a notice of default has been filed against your property, your lender has taken legal action against you. If you are behind in payments we urge you to contact your lender, to clear the issue promptly.

Warning: Entering into a forbearance agreement with your lender does not limit your lender from reporting your loan delinquent.  In fact, most lenders will flag the loan with the credit bureaus as “Forbearance” and by doing so, your credit score can be impacted and other creditors may consider to close or reduce your credit limits on your credit cards and lines of credit.  

Option 1: Loan Forbearance or Modification

A strategy worth pursuing is called a loan forbearance. The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period.

A typical example – You owe $9,000 in back payments, attorneys’ fees, etc. Your mortgage company may accept $4,500 now and $750 per month for the next 6 months. Of course, you would have to resume making your normal monthly payments.

A loan modification is a permanent change to your mortgage that may lower your payments and the delinquent payments may be added to the mortgage balance. A loan modification or forbearance is easier to arrange prior to the Mortgage Company filing a foreclosure or a lawsuit. Some lenders will not consider this after filing, but it’s worth trying.

Option 2: Mortgage Rate Reduction or Loan Structuring

In most cases, when the consumer is able to make future mortgage payments (even if it is not a full mortgage payment), a loan modification and mortgage pay rate reduction is a possibility.

A loan modification involves demonstrating to the lender that a temporary situation caused the borrower to fall behind on the payments. In addition, it must show that the situation has now been resolved completely and the borrower is now eligible for a mortgage rate reduction.

This typically requires proof that the borrower earns enough household income each month to make a mortgage payment (e.g. residential lease for a room, or rooms). Loan Modification is also a great alternative for a borrower who cannot quite afford their current or upcoming mortgage payments, but would like to stay in their property. In this specific situation, a mortgage pay rate reduction is an ideal solution because it will lower the monthly mortgage payment to a manageable amount.

This process is also useful when the payment on the property has not been made for a while, but the borrower is now financially able to start making the payments again.

A recapitalization agreement is a type of Loan Modification that would be most beneficial for a borrower who had fallen behind on mortgage payments. This agreement takes the sum of the arrears, fees, interest, and accumulated payments, and adds it to the principal of the mortgage loan.

Even though, this results in a slightly larger principal loan amount, the borrower will now be current on future mortgage loan payments. Another option  a more affordable loan amount would be to negotiate with your lender to extend your loan for a longer period of time.

A Loan Modification will change your existing mortgage loan and give you a fresh new start in managing your home. Your account will be brought up to date immediately.

Each and every case is different and the actual results vary.

Should you need additional information, please contact us at 877-522-7726