Unfortunately, not every situation can be resolved through your loan servicer’s foreclosure prevention programs or through government assistance. Sometimes the servicer may deny you help with paying bills or your home loan. If you’re not able to keep your house as you are too far behind on your mortgage, if you do not want to keep it, or if foreclosure prevention programs do not work, also consider some of the following solutions:
Selling Your House: Your mortgage servicer will sometimes postpone the foreclosure proceedings if you put your home on the market or have a pending sales contract. This approach will often work if the sale price can pay off the entire mortgage balance plus any additional bills or expenses connected to selling the home (as an example, real estate agent fees). A sale this way would also allow you to avoid legal bills and late fees that may be involved. It will also stop any potential damage to your credit rating, as well as protect your equity in the property.
Short Sale: This means your servicer may grant you permission to sell the house yourself before the servicer forecloses on the property. Short sale also means that they agree to forgive or waive any shortfall between the sale price and the mortgage balance. This approach also avoids a damaging foreclosure filing on your credit report.
However, be sure to review this as you may face a tax liability on the amount of debt forgiven. You more than likely will need to consult an accountant, financial advisor, or attorney for more information on the short sale process. It is strongly recommended and should be considered as one of the upcoming solutions to giving up your home without needing to file a foreclosure. This option may also allow you to get reestablished as quickly as possible into a new home in the not so distant future.
Stay in your home: Possibly the opposite of giving up your home. However, many attorney are recommending that people do not leave their home, that they stay in it even after a foreclosure notice has been served. This can buy you months of time, and often force the lenders hand so they will modify your loan or offer you additional options.
Basically it involves not leaving your house after you receive some type of foreclosure notice, as many mortgage servicers’ and banks are slow to process the paperwork and force the issue. It is like living rent free. This has been particular effective with the delays that are currently occurring in the foreclosure process that is being undertaken by many lenders. More.
Deed in Lieu of Foreclosure: You will voluntarily transfer your home title to the servicers name (along with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you will still lose your home, a deed in lieu of foreclosure will often be less damaging to your credit than a foreclosure. You will also lose any equity you may have had in the property, and you may also have an income tax liability on the amount of the mortgage that is forgiven. However the benefit to your credit rating makes this one of the better options, and it may also help avoid any litigation with your home loan servicer or bank.
Before you take action on any of the options above, it is always recommended to speak to a housing counselor first. They will offer more pros and cons to each of these solutions for giving up a home. Locate HUD certified agency.
Specialists from these federal government approved agencies can guide homeowners on all of the options and programs available to them. If one of the above solutions is not the best option, then they can help with exploring the pros and cons of giving up your home using other tactics.
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