Are You Looking to Stop Foreclosure?


If you are facing a possible foreclosure, you do have some options for actions that you can take.  Below is a list of those options along with the pros and cons of each.



Option

Pros

Cons

Refinance

1. Gets you a 30 year mortgage at today's low rates.

1. Not able to qualify for refinance if you have missed payments on your credit.                                                        
2. Need equity in home in order to qualify for refinance

Loan Modification

1. Adjusts your interest rate to a low rate and spreads balance due out for another 30 years.

1. Over 4.5 Million Homeowners have applied for a HAMP Loan Modification since January, 2009. As of April, 2011, only 670,000 or less than 15% have received successful permanent modifications.                                                      
2. Modification typically doesn't solve the equity problem of owing more than your home is worth.

Bring Your Loan Current.

1. Gets you back on track with your lender.                                                          
2. Allows you to stay in your home.

1. May not be financially realistic & feasible.                     
2. Doesn't solve the equity problem of owing more than your home is worth.

Do Nothing & Allow Bank to Foreclose

1. Gets you out from under your underwater loan.          
2. Depending on type of loan, you may protect yourself from deficiency judgment.

1. You won't be able to stay in your house.                        
2. Depending on type of loan, you MAY open yourself up to a deficiency judgment.                                                        
3. A Foreclosure is considered the worst possible mark that you can stamp your credit report with.                                                          
4. You will not be able to purchase another home for a minimum of 7 years.

Deed-in-Lieu of Foreclosure

1. Allows you to voluntarily deed your house back to your bank.                          

1. You won't be able to stay in your house.                        
2. Typically not an option if you have a 2nd mortgage.                                                                          
3. This is similar on your credit to a Foreclosure.                                                              
4. You will not be able to purchase another home for 5-7 years.

Short Sale

1. Protects your credit from a Foreclosure.                                                       
2. Debt is considered paid in full.  As of 2011 California SB 931 & SB 458 protect homeowners who do short sales from deficiency judgments on senior & junior liens.                                           
3. You are able to exit your house on your terms just like with a standard sale.                                                                     

 

 

1. You won't be able to stay in your house.                         
2. If you have late payments on your credit report, you won't be able to buy another home for 2-3 years                                

Bankruptcy

1. Will Buy you some time before the bank forecloses.                                  
2. May be a good way to deal with your overall financial situation.

1. Does NOT stop the foreclosure process.  Only puts a temporary stay on the process.                                                             
2. Bankruptcy is also very damaging to your credit and brands you as risky with future potential creditors.


 

Please email or call us at 714-989-6176 for a no-cost, no-obligation, confidential foreclosure prevention consultation.



Please do not consider this legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Please consult an attorney & CPA.