Wishing the problem away is not an option. Borrowers should contact their lender immediately. Lenders usually prefer that homeowners keep their homes and may agree to a solution. An approved non-profit housing counselor may also provide help.
Options include reinstatement where the lender agrees to payment of the outstanding debt in a lump-sum payment by a certain date. This is often used with forbearance where the borrower can show that funds will be available at a specific time through a future bonus, tax refund or other source. In return, the lender may agree to a temporary reduction or payment suspension until this payment is made. Late fees and other additional costs, however, are often charged.
A repayment plan is an agreement that provides a specific time for repayment of the delinquent payments by combining a portion of this debt with regular payments. At the end of the repayment period, the borrower gradually made up the overdue payments.
Borrowers and lenders may also agree to loan modification. The mortgage company and the borrower enter a written agreement to modify the original loan to allow for more affordable payments.
There are other avenues to avoid foreclosure. A short payoff allows borrowers to sell their home. If the sale proceeds are less than what is owed on the mortgage, the mortgage company may allow a short payoff and write off the amount of the mortgage that exceeds the sale proceeds.
A deed-in-lieu of foreclosure cancels a mortgage by the voluntary transfer of title to the mortgage company. This option usually requires a sale 90 days earlier for the home’s fair market value. There cannot be second mortgages, judgments or other liens on the home.
An assumption allows another qualified buyer to assume the mortgage debt and make mortgage payments. This allows a borrower to sell the property.
Refinancing may be risky and susceptible to predatory practices. Borrowers should also be aware of recovery scams, particularly those which seek signature of documents authorizing them to act on your behalf or surrender the title. For-profit foreclosure prevention or loss mitigation companies also charge hefty fees for little help.
Home owners have numerous rights under federal and Florida law. An attorney can advise them on these rights and take appropriate legal actions.