Bank Negotiation Programs

In order to consider these options you must first determine if you are able to afford your house.  If you cannot live up to the obligation you might need to consider selling or giving up your house.

Forbearance Agreement:

Your lender may be able to offer a re-payment plan based on your financial situation and may even provide for a temporary reduction or suspension of your monthly payments.  You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses.  Your lender may have a package that you will need to complete for such a program.  You must furnish the information they need to meet the requirements of the new re-payment plan.  Other alternatives include a short term payment plan to cover the deficit or adding the unpaid balance to your principal.  This agreement can sometimes take 30-60 days to work out so don’t wait until the last minute.

Modification Agreement:

You may be able to refinance the debt and/or extend the term of your original mortgage loan.  This might make your new monthly payment affordable and allow you to catch up your back payments.  A longer term will reduce your monthly payments.  Use caution, it has been my experience that most lenders do not offer modification agreements.

Partial-Claim Option:

If your loan is a VA or FHA insured loan, your lender may be able to work with you to obtain a one-time payment from the VA or FHA to bring your loan back to a current status.  There are several qualifications you will have to meet.  You should contact the VA or FHA immediately to investigate this option.  They will tell you if you qualify and help provide assistance with your current situation.  They may also have additional solutions to help save your home, or provide funds.  With a Partial Claim, your lender will receive the amount necessary to bring your mortgage current and a lien is placed on your property until that amount is paid back in full.  This loan is usually interest free and can be paid once the property is sold.

Pre-Foreclosure Sale Option:

This option allows you to avoid foreclosure by selling your property before the foreclosure process is complete.  In some cases, you Will be allowed to sell the home for less than the amount owed on the mortgage (short sale).  you or the purchasing party will need to contact your bank to request a short sell package.  To qualify, your loan must be at least two months in default and you must be able to sell your house within less than 5 months.  Other qualifications may apply.

Deed-in-lieu Option:

As a last resort, your lender may allow you to voluntarily “give back” your property to the lender.  This will not save your house but is less damaging to your credit and will help you in the long run.  this will also prevent you from being subject to a deficiency judgment.

Short Sale:

In a short sale the borrower makes an agreement with an investor to sell the home for less than is actually owed, subject to approval of the lien holders.  This always results in no cash to the homeowner but will be better for his credit than a completed foreclosure.