We’ve talked a lot about foreclosure and eviction and today, in the same vein, we’re covering foreclosure prevention. More specifically, we’re going to be talking about foreclosure prevention tips – steps that you can take before foreclosure to save your home or your financial standing.

Foreclosure Prevention: Getting Legal Help to Avoid Foreclosure

If you are facing foreclosure, these tips could help…

Loan Modification

A mortgage loan modification is when you request that your mortgage company modify your existing mortgage loan to make your current monthly payment more affordable. There are a few things to consider when looking at a loan modification, however.

Firstly, you HAVE to be sure that you can afford the new monthly payments on your modified mortgage loan. If you know that you will be unable to make these payments, don’t go through with the loan modification because you’ll only wind up back where you are now in a few months.

Secondly, you should know that most mortgage loan modifications extend the life of your loan. This is a necessity in most cases in order to bring down your monthly payments. While this may not seem like a “big deal” extending the life of your loan may mean that you wind up paying much more for your home in the long run. With that said, you do get to stay in your home.

Short-Sale

A short sale is not a preferred method of avoiding foreclosure for most people simply because it means selling your home for less than you currently owe on your mortgage. For example, if you owe $145,000 and you short-sale your home for $100,000, you will still owe $45,000. Now, depending on where you live and the terms of your mortgage loan, your mortgage company may or may not be able to pursue you for the remainder of your balance owed

If you are considering a short-sale to get out of foreclosure, talk to your lender and ask that they waive any deficiency following the short-sale so that you cannot be pursued for the remaining balance. You MUST get this in writing!

Forbearance

A forbearance agreement is something we have been hearing a lot about with the current economic status during the COVID-19 pandemic. In general, a forbearance agreement can do a couple of things…

  • It can provide for you to make a smaller monthly payment for a set period of time to allow you to stay on track with your mortgage payments.
  • It can allow you to skip mortgage payments for a set period of time to allow you time to get back on your feet and resume making full payments after the forbearance period is over.

It’s important to remember, though, that with each of these options, your loan is not going to be reduced, you will be required to pay the money you did not pay during the forbearance period at the end of your loan or your monthly payments may be increased once your payments resume.

Deed-In-Lieu of Foreclosure

Deed-In-Lieu of Foreclosure is a way to avoid foreclosure, but it does not allow you to remain in your home. In this arrangement, you sign over the deed of your home to your mortgage lender and walk away. Just like a short-sale, you must check with your lender to see if they will agree in writing not to pursue you for any remaining balance on the home once you sign over the deed.

When you pursue a deed-in-lieu of foreclosure option on your home, you should also consider speaking with your lender about their “Cash for Keys” program. Not all lenders offer such a program, but if they do, this is a program that provides you with cash to help you to pay your moving costs and establishes a date at which you must turn over your keys to the home. (This is a program that is also offered to rental tenants by landlords who need to evict tenants but wish to avoid the eviction process and cost and get the tenants out of the property as soon as possible).

Repayment Plans

A repayment plan is exactly what it sounds like – you speak with your mortgage lender and work with them to create a repayment plan for backdated payments. A repayment plan will be set up over a specified period of time so that you are paying your monthly mortgage payment on time as well as a set amount towards your backdated payments that were missed.

This is a good way to stay in your home and take care of past-due payments but ONLY  if you are not suffering any kind of financial hardship currently. For example, if you missed four payments because you were unemployed, but now you have a better paying job than your last and will be able to pay an additional payment monthly on top of your on-time mortgage payment.

This is NOT a good option for you if you are in a precarious financial position. For example:

  • If you have been unemployed for a significant period of time and have no employment prospects on the horizon
  • If your financial situation is unsteady due to contracting work, illness, or the pandemic
  • If you know that you won’t be able to stretch to a monthly payment plus an additional payment every month for the specified period of time.

Too Late For Foreclosure Prevention Tips?

If it’s too late for foreclosure prevention tips and you need representation while fighting foreclosure in Florida, Weidner Law can help. To find out how we can help you get back your home, give us a call today at 727-954-8752.

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