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Most people these days know that foreclosure, short sale, or deed-in-lieu are the big three weapons that lenders use to prevent further loss. but there is a lot more in the lenders’ arsenal. Other remedies for troubled homeowners include:

1. Modifying the length of the loan or the interest rate
2. Waiving penalties and fees
3. Deferring payments to the end of the loan and making it longer
4. Applying past due amounts to the loan balance and slightly increasing each monthly payment
5. Holding a fixed rate on a loan ready to adjust
6. lengthening an introductory payment or interest rate or
7. granting temporary forbearance to stop the payments.

Presenting Your Request to the Lender

Not being social service agencies, banks do not widely advertise this “softer” side. To bring it out and allow a workout, you need to make a good case for yourself: make the lender confident that this will stop further loss. Just as is true with all credit issues, contact your lender at the first sign of trouble.  Your steps might include:

• Explain why you are in trouble and why you think the problem is temporary. If your interest rate changed and increased your payment, you need to show evidence you paid on time before change.  If your problems were caused by job loss, illness, or family circumstances, you need to show that it is likely you will have a job soon or that the crisis has passed.
• Show the bank that you have been trying to work things out on your own, through job hunting, part time jobs, or by reducing your living expenses.
• Present a specific proposal to the bank, with alternatives, verbally and in writing. A non-profit housing counselor, a real estate attorney, CPA, or other qualified source may be able to offer you some suggestions about what to propose. A typical request might suggest lengthening the loan, making it fixed, not adjustable, and lowering the interest rate.  If your proposal will lower your payment by $500 per month, you need to show how this will help you catch up and be on time in the future. A good faith payment might sweeten the pot if you are way behind.

Good preparation will increase the chance that the lender will accept your proposal.  Make sure to discuss with the lender representative how the new agreement will affect your credit record.  Your goal is to have your new payments reported to the credit bureau as “Pays as agreed,” but make sure you understand the credit ramifications before you finalize the terms.

If you decide you would prefer to sell your home, check out  Express Homebuyers.  We promise to buy your house fast or we’ll guarantee to help you sell your house fast and help you make a fresh start.

If you are in financial distress and fear you will lose your home, you may feel frustrated and hopeless.  Some of the alternatives presented to you may seem pretty much the same: you will lose your home. You can do a short sale, let the bank foreclose, or file bankruptcy.  Your choices may have the same import as waiters on the Titanic asking diners sitting in water to their waists if they preferred coffee or tea.

Being in this situation is not what you anticipated when you scraped and saved for your home. However, if you can adopt the philosophy that homes and material things are replaceable, you can get through the situation and aim for a fresh start.  Short sales, foreclosure, or  bankruptcy can provide this. What you should aim for is the solution that has the smallest long term impact on your credit score and the greatest chance for you to move onto the next step with dignity.

Preserving your credit score is important. Not only is a good credit score necessary to get future credit and get it at a decent rate, it may impact your ability to rent or buy a house, get insurance, and even get a job. If you fall on hard times, you will take an inevitable hit.  Your concern should be with preserving your score as best you can. The means that in order of the least damage to your credit, it is short sale, foreclosure, and bankruptcy.

Short sale: If your home’s value is not enough to pay off the mortgage, you could ask your lender to authorize a short sale where you can sell the home for less than you owe.  This approach saves the lender time and money compared to a foreclosure and allows you have more time to plan your nest move as the process takes a while. You will lose 80 to 100 points on your credit request, but within 18 months the impact on your score should lessen.

Foreclosure: When the bank takes your home, you lose 200 to 300 points on score and can’t buy another home for at least three years.  Given the large numbers of foreclosures these days, foreclosure might have a relatively small social stigma and economic impact over time.

Bankruptcy: Bankruptcy will remove your debts or allow you to repay them over time, depending on whether you file Chapter 7 or 13 bankruptcy.  The number of points you lose depends on what your credit score was before you filed, but the event will stay on your record from 7 to 10 years. Despite the effect on your credit rating, this may still be the best choice if you are burdened down with a lot of other debts besides your mortgage.

Any of these methods can offer a fresh start to you if you are in trouble.  If you want to sell your home now, Express Home Buyers can offer exciting alternatives. Whether you are in financial trouble, face foreclosure, have a property that needs a lot of work, or have an inherited house, we can sell your house fast. Because with us, it’s Guaranteed2Sell.

Suppose you are in a bad situation and you fear you will lose your home. You are up late fretting about this, when all of a sudden, as you are trying to channel surf your problems away, you hear an infomercial that someone has the answer to your housing woes!  They will share it with you, if you just call for free mortgage help. Operators are standing by…

It is too good to be true. Though all the great economic and social thinkers in the country are struggling to find a solution to the housing crisis, you have found the answer at 3 am. So you call and the company promises to solve all your foreclosure problems, a dream come true!

How the Programs Work

You find they want an upfront payment, often equal to a month’s mortgage payment. This is a stretch for you, but maybe worth it. They say they will intercede with your lender. They may ask to you to sign over a deed to the property. You think all is well until your lender contacts you and says that because they have not heard from you or received any payments, they will have to take further foreclosure action. You are confused, you are mad, you are devastated. Then you realize: YOU’VE BEEN DUPED by foreclosure scammer!

The company may not have made with contact the lender, while the fee you paid probably never got to your lender, though you got a phony document that the foreclosure has been set aside. You may owe your lender more than you did before you called for “help.” You may receive a bankruptcy filing in the mail, filed in your behalf, without your knowledge. You may end up with more legal bills, a poor long-term credit picture that will make it hard to buy or rent for 10 years, and perhaps, have no home if he has signed over the deed.

Types of Scams

There are many variations on these scams, but in any case, you usually end up in worse shape. Foreclosure scams fall into three main categories:

Phantom help: The company promises to contact your lender, which they may or may not do, regardless of what they tell you. They may fill out some basic paperwork you could have completed yourself.

The bailout: The company offers to buy the home and rent it back to you until you can buy it back. Many times, they pocket what you pay while never dealing with your lender, so you end up with no property and no place to live.

The bait and switch: The company may have you sign documents to make the mortgage current, but actually you are signing over your home.

Free Help Available

Not all companies who charge a fee for mortgage help are scammers, but if you’re at risk of foreclosure, legitimate free help is available from several sources:

The Federal Government through Making Home Affordable. Even if you do not ultimately qualify for this program, there is plenty of free or very low cost help available from HUD-approved counselors and non-profit groups that will either help you stay in your home or move on to a new stage in your life. Ironically, since the government started its program, foreclosure scams have actually been on the rise.

The State of Maryland through the HOPE Program. HOPE (Homeowners Preserving Equity) is committed to help both owners and renters affected by impending foreclosure. Homeowners can find information about free foreclosure prevention counseling by calling the Maryland HOPE Hotline at 1-877-462-7555 or by visiting our counseling page. More Myths and Facts about Foreclosure Prevention are revealed on their website.

If you want to sell your home quickly and move on with your life, Express Homebuyers can help with that. We can buy your home outright or list it for sale. Fast!