Stop Foreclosure with a Debt Workout
If you're in jeopardy of losing your home, you're probably willing to try just about anything to stop foreclosure and get the situation "worked out.” It may surprise you to learn that your mortgage lender may very well feel the same way and also want to stop foreclosure. Since foreclosure proceedings can be expensive and leave lenders with deficiency judgments they can't collect, it's often in the lender's best interest to try to stop foreclosure by working things out.
While Chapter 13 bankruptcy and refinancing may help you stop foreclosure, a “debt workout” may help you do so via several different options. The common thread with debt workout plans is that someone operating on your behalf contacts the mortgage lender and negotiates a workout that is acceptable to both parties. A debt workout isn't going to make your mortgage debt disappear, but you may be surprised at some of the possibilities that exist to stop foreclosure.
Some of the more common forms a debt workout may take include:
- Modification of Existing Mortgage;
- Repayment Plan or Forbearance Agreement; and
- Short Pay or Short Refinance.
Learn more about these different forms of a debt workout and how they may help stop foreclosure.
Stop Foreclosure by Modifying Your Existing Mortgage!
So how does modification of an existing mortgage work to stop foreclosure? Basically, the lender agrees to change the terms of the existing loan, which may mean a lower interest rate, extending the life of the loan, or lowering the payment toward principal for a time. There may be other possibilities as well, but these are some of the most common.
If you've already talked to your mortgage lender and been unable to work out a plan to stop foreclosure, don't despair. Professionals are often able to negotiate agreements to stop foreclosure that individual debtors cannot.
How Can a Repayment Plan or Forbearance Agreement Help You Stop Foreclosure!
Under a repayment plan or forbearance agreement, you must pay a portion of the past-due payments and agree to pay the rest over time while keeping up with your current mortgage payments. Most lenders are very willing to enter into this sort of agreement to stop foreclosure if you can demonstrate income that will allow you to keep up the payments and you are able to make an adequate initial payment. What constitutes an adequate initial payment may vary depending on your circumstances, but 50% of the past due amount is common. In some cases, lenders may even agree to add the past-due payments on to the end of the loan without requiring any payment up front.
Short Pay or Short Refinance as a Means to Stop Foreclosure
Why is it called short pay or short refinance? The mortgage lender may agree to accept less than the full amount of the mortgage in full satisfaction. Typically this arises in a situation where the homeowner can refinance or can sell the house, but for less than the full amount of the outstanding debt. Mortgage lenders will sometimes opt to accept less than full payment rather and stop foreclosure rather than pursuing it because of the costs associated with foreclosure and the low likelihood of collecting on a deficiency judgment.
Remember, these are just a few options to stop foreclosure. A professional negotiator can assess your circumstances and your ability to pay and work with your mortgage lender to try to find a resolution that will stop foreclosure and work for both of you.
Ready to Learn More about How You Can Stop Foreclosure?
If you'd like to stop foreclosure through a debt workout plan, or would just like to learn more about the possibilities of a debt workout, fill out the form on this page and a professional negotiator will contact you to discuss your options.
Get the information you need now to stop foreclosure-mortgage foreclosure proceedings will keep moving forward whether you're prepared or not!