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Loan Workout Types |
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Loan Workout Types |
When a lender is looking at a solution for a defaulted loan, there is a range of solutions ranging from a simple repayment plan all the way down to completing the foreclosure action. The options are listed below in the order most lenders will prefer to workout a defaulted loan with the repayment plan being the preferred, most used option. If you have questions regarding these plans and whether they may work for you, answers can be found in our Foreclosures Discussion forum.
A formal or informal plan to re-pay the lender all of the past due amounts and fees over a period of time. This type of workout will usually require a downpayment, then monthly payments along with your regular monthly payment.
The lender has the capability to reduce or suspend payments for a period of time allowing you to recover from a financial setback.
Designed to resolve default for longer term financial problems, this could include reduction of the loan interest rate, or reducing payments.
If the loan cannot be brought current and kept current, the payments on some loans can be assumed by a new borrower.
Sale of the property before the foreclosure can be completed. If proceeds from the sale aren't enough to fully repay the loan, this is often referred to as a "Short Sale".
This is the least preferred of all the options, and often not acceptable to the lender due to title issues or the presence of other loans against the property.
Workout Documentation
The documents necessary for a successful workout