If you're heading towards foreclosure, there's still time to get help. Whether you wish to stay in your home or leave it gracefully, you have a range of options that include working directly with your lender, taking advantage of a foreclosure assistance program or working with third parties qualified to assist you.
If you're not yet under foreclosure but know you can no longer afford to pay the mortgage, consider refinancing your loan at more affordable terms. The Home Affordable Refinance Program, or HARP, helps you refinance a conventional mortgage owned by Fannie Mae or Freddie Mac, while Streamline refinancing programs reduce interest rates for mortgages insured by the Federal Housing Administration or Veterans Administration. These programs feature relaxed qualification standards and may let you refinance a property even if you owe more than it is worth. You may have to shop for a lender that offers these government refinance programs if your current lender doesn't offer them.
Your lender may offer the Home Affordable Modification Program-sponsored modification or its own in-house program. Loan modification may include adding missed payments onto your mortgage, extending your amortization period, reducing your interest rate or even reducing your loan balance. Negotiating a modification can be time-consuming and complicated, so you may benefit from the assistance of an attorney. The U.S. Department of Housing and Urban Development also offers foreclosure counseling; you can find a list of foreclosure counselors in your area posted on HUD's website.
Move Out Gracefully
If you can't save your house, consider working out an arrangement with your lender to leave the property. Through a process known as deed in lieu of foreclosure, you can turn the house over to the lender. You also could sell it for less than you owe in a short sale. Both solutions have a singular drawback; you could end up owing your lender money. If you qualify, the federally sponsored Home Affordable Foreclosure Alternatives program can help you avoid the pitfalls associated with moving out gracefully.
Some real estate investors specialize in sale-leasebacks. These investors buy houses through lender-approved short sales and lease them to their distressed owners. Some sale-leasebacks even have provisions that let owners buy back their houses in the future. Sometimes, these arrangements work well, but they also can be risky if the investor isn't capable of fulfilling the terms of the sale-leaseback agreement.
Hiring an experienced foreclosure attorney may cost you some money, but such an attorney may help your case. Having an attorney's input may help you get a timely response from your lender and spot dishonest foreclosure remedy offers. She also can use her skills to ensure a favorable outcome.
- FTC: Mortgage Relief Scams
- HUD: Avoiding Foreclosure
- HUD: Avoiding Foreclosure: When a Lender Won't Work with You
- MakingHomeAffordable.gov: Home Affordable Foreclosure Alternatives (HAFA) Program
- Nolo: Foreclosure FAQ
- Real Estate Investors Daily: Are Home Sale-Leasebacks Opportunities for Real Estate Investors?
- Banking My Way: Homeowners Should Steer Clear of Sale-Leasebacks
- Bankrate: 8 Tips for Choosing a Foreclosure Attorney
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.