I want to help you avoid foreclosure. There are several things that you can do to make your life easier, and possibly save yourself the stress that going through a foreclosure will bring. Please don’t underestimate it, foreclosure was the most stressful thing I have ever been through. It was confusing and embarrassing. But I am coming to you with this series of videos from a “been there, done that” point of view.
When I was in the situation, I tore apart my state’s foreclosure system. My earlier and future videos are filled with a ton of useful information about what starts a foreclosure, and everything you can do about it. Here, I want to give you the limited options on how to avoid the foreclosure completely. Be forewarned, this is nasty, and if you are in this situation, nothing will make you feel good about it.
NOTE: The information provided by John Ross is intended for educational use only. Please consult with a registered professional before acting on any information herein.
0:00 Alternatives to Foreclosure
0:52 What Are Your Alternatives to Foreclosure?
2:09 Short Forbearance
3:11 Short Sale
4:10 Deed in Lieu
4:33 Short Term Rental
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As of this recording, there are options of Forbearance that will simply tac-on your missing payments to the end of your Mortgage loan. However, in doing so, they will add a by-line to your Credit Report, that will effectively tank your credit. This is from the usual bank garbage, where they violate the intent of the law, with the letter of the law. With the intent of the law, the government did not want any late information added to the Credit Reports. The banks said “fine”, but instead they added to the description of your loan, noting that you haven’t been paying them for the past few months. Sneaky, right?
You can go for a short forbearance, where your lender may forgive a part of your loan and instead refinance the remaining debt into a separate new loan. Forgiving lenders may also grant you forbearance and agree to help you out if they believe that your missed payments are due to a valid reason that’s only temporary, or they may go for a loan modification so that you can have your mortgage loan term altered or extended. This sounds fine, but in reality, they don’t care if you stay in the house or not. So they are not going to be losing money just to help you out. I mean, think about it. Why would they (or anyone) give you a second loan? You just had 120+ days of missing your mortgage payments.
Alternatively, if there is equity in the property, you could simply sell it. If you owe more than it’s worth, then you could possibly do a Short Sale. This is where the bank agrees to sell the property at a loss, and you agree to leave after the sale. If they know that a lengthy foreclosure is inevitable, they may accept a lower offer. This is because foreclosure will cost the bank tens of thousands in lost money. But to them, it’s more about the time the court case would take. They would prefer to get this bad debt sold off, and move on.
Another option is to give your property to the lender willingly, in exchange for them removing your debt. This is called a deed in lieu of foreclosure, and can only be done if you can’t sell your property before foreclosure, such as a Short Sale. This is also called Deeding the Property Back to the Lender. This helps you avoid any extra bad marks on your credit report. But let’s be honest, it doesn’t matter. Your credit is already tanked.
There’s also such a thing as short-term rental. Here, you can stay in your home until you find a new place to transfer to, depending on your arrangement with the lender and negotiations on the right to retain occupancy. This is not really a thing though. Banks are not in the business of being landlords. So don’t be expecting a handout.