If you are simply sick to your stomach about contacting someone about your current home issues we understand completely. We ourselves have had friends, family and even some team members have to deal with this stress and the unknown.

We want to give you some options and some information.

If you are having problems with your home the big
question is WHAT are your options? Here they are . . .

1. Do Nothing
If a homeowner does nothing, they most likely will lose their home at foreclosure auction.  Loan applications generally ask if the applicant has ever been foreclosed upon.  Credit reports also disclose this damaging information. Not the best option. The bank can attempt to recover whatever they do not after selling the home including the cost of the foreclosure to them, often an additional $30,000-60,000.

2. Payoff/Refinance
Completely paying off the entire loan amount plus any default amount and fees.  Usually this is accomplished through a refinance of the debt.  New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default.  With this option, there should be equity in the home.

3. Reinstatement
Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4. Loan Modification
Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan.  This may allow the homeowner to catch up at a more affordable level.  To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

{ The latest push from 'Some' banks is to look closer at this option for home owners. We are seeing that most people in our area in Northern Virginia do not fit some of the most basic requirements for these refinances. Check with your bank on the guidelines first. Often they require your home value be no less than 90% of the new loan value. For many of us the value is 50% or less! Another requirement we see stopping many home owners is a banks requirement that the total income paid towards the mortgage not exceed X-%. Again, check with your banks guidelines but our experience is showing most are above the maximum allowable amount. }

5. Forbearance
Lender may be able to arrange a repayment plan based on the homeowner’s financial situation.  The lender may even be able to provide a temporary payment reduction or suspension of payments.  Information will be required from the lender to show that you are able to meet the new payment plan requirements.

6. Partial Claim
A loan from the lender for a 2nd loan to include back payments, costs and fees.

7. Deed in Lieu of Foreclosure
Give the property back to the bank instead of the bank foreclosing.  Banks generally require the home be well maintained, all mortgage payment and taxes must be current.  Most loan applications ask if this has ever happened. Not typically an option if you have more than one loan on the home.

8. Bankruptcy
This option can liquidate debt and/or allow more time.  I can refer you to a qualified bankruptcy attorney.

     --Chapter 7     (Liquidation) To completely settle personal debt.
     --Chapter 13  (Wage Earner Plan) Payments are made toward a plan to pay off debts
                               in 3-5 years.
     --Chapter 11  (Business Reorganization) A business debt solution.

9. Sale
If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale.  In this case, the homeowner will get cash from the sale. 

On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value. Short Sales are complicated and not every Realtor is qualified to manage this process so interview your agents carefully.