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Foreclosure Workouts |
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Foreclosure Workouts |
Lender Workout Options
A lender workout is based on the concept that neither you or the lender really wants to complete a foreclosure. Although the relationship between homeowners and those who are responsible for collecting payments can be very difficult at times, the lender really doesn't want to have to foreclose. Workouts are a way to allow the homeowner to make up the past due payments or sell the property while trying to minimize the financial burden. There are several different types of workouts for people who have suffered an unforeseeable financial hardship.
Forbearance
This is a written plan between you and the lender that will reinstate the loan over a
period of time, often 12 months. It will often require a payment of 50% of the past
due amount to begin the plan with the balance spread out over 12 months paid along with
your normal house payment. This is often the preferred lender option.
Loan Modifications
The lender has the capability to modify your existing loan, with your agreement.
Lender Refinance
Some lenders can refinance the existing loan and include past
due payments in the new loan amount. If your loan is a government backed loan, you
might also be able to have the default amount written as a new loan, payable when you
either pay-off your 1st loan or sell the property.
Pre-Foreclosure Sale
The lender may assist you with the sale of your property even if you owe more than the
property is worth by agreeing to accept less than they are owed as full payment.
This is also known as a short sale.
Deed-Lieu-of-Foreclosure
Many lenders will only consider a deed in lieu if none of
the other options work and title to the property is clear of any problems and there are no
other loans against the property.
