Foreclosure – i.e., when your home is sold to the highest-bidder at a public auction – is not inevitable. There are alternatives. Here is a list of 11 other options. It is very important that you discuss your specific case with qualified professionals; what is right for someone else may not be right for you. For more information, contact us. Our email address is SaveMyHome@LaneCountyHomeSavers.com and our local, direct phone number is 541-302-4850.
Following is a list of 11 alternatives to foreclosure:
- Reinstatement. If the reason for missed payments on a mortgage is temporary and has been resolved, a homeowner has the option to reinstate the mortgage right up to the scheduled auction sale by paying all missed payments and any accumulated fees. Once the mortgage is reinstated, the homeowner returns to normal, monthly mortgage payment status.
- Forbearance or Re-Payment Plan. If the reason for missed payments on a mortgage is temporary and has been resolved, but a homeowner does not have the means to repay all the missed payments and accumulated fees, the lender may be willing to work with the homeowner to repay the missed payments over time.
- Refinance. If a homeowner has sufficient equity and income and their credit is still good, they may be able to refinance.
- Loan Modification. In cases where a homeowner does not have the means to afford the current mortgage, the lender may qualify them for a “loan modification”. This usually involves a combination of both lowering the interest rate and extending the loan over a new term (e.g., 30 years). Homeowners need to document the ability to repay.
- Short-Refi. This is a relatively new option and involves the refinance of a home with potential reduction in both the principal and interest rate. As with a refinance or loan modification, homeowners will need to document their ability to repay.
- Deed-in-Lieu of Foreclosure. Sometimes called a “friendly foreclosure” because the homeowner essentially gives the deed back to the bank. There are very special circumstances where this may work, and if a homeowner has equity in the home, is not a good option.
- Service Members Civil Relief Act (SCRA). The SCRA is a bill that was signed into law (Public Law 108-109) on December 19, 2003. This law provides certain protection to military personnel that are in foreclosure in specific situations; the law also provides Service Members with other protections.
- Sell the Property. If a homeowner has equity in the home (i.e., market value exceeds outstanding loan balance and any accumulated penalties) they can sell the home and cure the foreclosure. It is important to understand how much marketing time is available before a foreclosure auction date, and to work with a real estate professional.
- Rent the Property. In some cases, homeowners facing foreclosure may have payments that are low enough to allow them to rent the property out and keep up with mortgage payments. It is important to dial in any upcoming payments for property taxes, insurance and maintenance when evaluating this option.
- Short Sale. When a homeowner owes more on a property than it is currently worth (i.e., “Market Value”), and any of the other above solutions do not apply to their situation, there is the option of pursuing a short sale. In Oregon, only licensed Real Estate professionals may negotiate short sales with lenders on behalf of a homeowner.
- Bankruptcy. A bankruptcy may stop a foreclosure and allow a homeowner to reorganize his debt and keep the home. Only a consultation with a qualified bankruptcy attorney can help a homeowner understand if this is an appropriate option.
Note: The information above is provided as general information for homeowners. Lane County Home Savers, LLC cannot guarantee that any of the options above will be appropriate for a particular homeowner. But we will provide whatever resources that we can to help each homeowner get the best advice available to make an appropriate decision for his or her circumstance.
