Avoid Foreclosure-Temporary Loan Relief Alternatives
February 20, 2008 2 Comments
One of the most important duties that I have is educating my clients and future clients about various aspects of the real estate market in Atlanta. With the current economic climate and foreclosure being discussed on virtually every news broadcast, it is important for consumers that are experiencing financial difficulty to know what their options are. In the recent post about How To Avoid Foreclosure I mentioned that there are some temporary alternatives that do not result in the loss of your home. Let’s take a closer look at what they are.
Forbearance
Forbearance is an agreement between you and your mortgage company that temporarily allows you to pay less that the full amount of your monthly payment or nothing at all during the forbearance period. Generally the mortgage company will consider forbearance when you can show that funds from a bonus, tax refund or other source will allow you to bring the mortgage current at a specific time in the future.
Loan Modification
A loan modification is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your loan in order to make the payments more affordable. Common loan modifications would include adding missed payments to the existing loan balance, changing an adjustable-rate-mortgage into a fixed-rate mortgage or extending the number of years for you to repay the loan.
A Repayment Plan
A repayment plan is an agreement between you and your mortgage company that gives you a fixed amount of time in which to repay the amount that you are behind on your mortgage. In this alternative you actually pay your regular monthly payment and add an additional portion of the past due amount to each installment. At the end of the repayment period you have paid back the amount that was delinquent.
Reinstatement
Reinstatement occurs when you pay your mortgage company the total amount that you are behind on your mortgage in one lump sum. A reinstatement generally occurs in conjunction with forbearance.
Knowing what options are available to you is often times half the battle. In many situations the best and least expensive alternative will be through working with your current lender or servicer of your loan. If your current lender has no desire to assist you, let me know. I can help you find a responsible lender that will help you or show you additional alternatives.
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2 Responses to “Avoid Foreclosure-Temporary Loan Relief Alternatives”
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I recently asked my mortgage co to help me( forbearance) as i try to sell house, i thought we had agreement to reduce mo payment, however my bill came (adjusted) with the normal payment plus the amount that we agreed to pay after our talk. 600.00 initial reduction, but they added that to my normal payment of 1600.00 mo. i called & they said this was repayment plan agreed on!
I understood that they were going to drop my monthly payments to 600.00 no they added . Going in wrong direction. so how do i work out a deal especially while i am trying to sell my house.??
JW
Prior to agreeing to any modification in your monthly mortgage payment make certain that you have had an opportunity to review the changes in writing. If you had seen this in writing I am betting you would not have agreed to it.