DISTRESSED SELLERS
If you’re past due or facing foreclosure, Arico & Associates may be able to help you on possible solutions. Feel free to call us for more information.
You may want to seek advice from a housing counselor approved by the U.S. Department of Housing and Urban Development. For a listing of HUD-approved housing counseling agencies, you can check online HUD’s online directory or access https://www.hud.gov/topics/avoiding_foreclosure
Loan Modification
It may be possible to modify your mortgage contract to incorporate your past-due amounts and sometimes even reduce your monthly payment. This may be done by extending the loan term, lowering the interest rate or capitalizing past-due interest. However, this is a legal change to the terms of the loan and involves obtaining approval from the loan owner or investor.
Pre-Qualifying Factors
- Customer must have a source of Income
- Income must be stable:
No Temporary Source of Income
No Unemployment or Temporary Social Security
Pensions are allowed as long as they are permanent. - Property and Mortgage must belong to person/s applying for the Loan Modification
- All liable parties must be willing to sign the Modification Documents
Short Sale or Pre-Foreclosure Sale
This will allow you to avoid foreclosure by selling your property for less than the amount you owe on your mortgage. This may be less damaging to your credit than a foreclosure.
Deed-in-Lieu of Foreclosure
As a last resort, you may be able to voluntarily “give back” your property to the lender. You won’t be able to stay in your home, but it is not as damaging to your credit rating as a foreclosure. This option is only available if there are no other liens or judgments on the property.
Foreclosure Facts
What is Foreclosure?
Foreclosure is when the lender takes possession of a property because the borrower is not making loan payments.
For the lender, foreclosure results in the loss of tens of thousands of dollars, sometimes as much as 40 percent of the loan principal or home value.
Not only does the borrower have to re-locate from their home, foreclosure also results in long-term damage to the borrower’s credit rating. Even when the borrower recovers from their financial difficulties, a foreclosure can make it difficult to get a loan for a future home purchase, for college expenses or to even get a VISA or MasterCard. Even if the borrower is able to get credit, they will likely have to pay higher interest rates.
Avoiding Foreclosure
Stay In Touch
One of the main reasons foreclosures happen is because borrowers do not take the opportunity to work something out with their lender. When facing financial difficulties, many people just stop communicating. They don’t return phone calls or answer their mail. This essentially guarantees that the borrower will lose their home.
If you receive a call about your past-due mortgage, the best thing to do is take the call and start down the path to resolving the problem.
Impact of Past Due or Missed Payments
Late or missed payments can have a negative effect on your credit rating, which may make it more difficult for you to get credit cards and loans in the future. You also may have to pay a higher interest rate on loans and credit cards you do get.
Help for Past-Due
Borrowers
Step one to protecting your home and your credit is to stay in touch. As soon as you know you’re going to be late with your payment, contact your lender. They might be able minimize the negative impact and even help you get on the road to resolving your financial difficulties.
Doing nothing guarantees the worst possible outcome – foreclosure, the loss of your home, and damaged credit, which will impact your ability to buy a home or get any kind of loan or credit card in the future.
Hope Program
https://www.hud.gov/programdescription/hope1
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