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Solutions and Services

Stop Foreclosure!

MyHomeSave realizes that a bank, or other lender, seeks foreclosure when it has good reason to believe that it no longer has any chance of repayment of the debt it is owed. The first step you can take to stop foreclosure on your home is avoid giving the bank any reason to believe it will not have its debt repaid! Just because you are unable to make a payment on your mortgage does not mean you have to lose your home. Keep in mind that the bank does not want to go through the costly and time-consuming foreclosure process if there are other viable options. In fact, mortgage investments agencies like Freddie Mac and Fannie Mae actually require lenders that they back to do everything they can to work with borrowers to avoid foreclosure. Homeowners will often avoid notices from their lenders after they have missed a payment. This is understandable and usually driven by embarrassment or the sense of helplessness. However, by not responding to the lender's notices, you are giving them their first reason to think you will not be able to repay your loan. Stop the foreclosure mindset through lender intervention with MyHomeSave, using one of the prescribed methods listed in the Alternatives to Foreclosure section outlined below.

MyHomeSave will present your situation and open the dialogue on options for avoiding foreclosure. There are more options available to stop foreclosure on your home when you are only one payment behind. The longer you wait and further behind you get, the more your options decrease. MyHomeSave will review the terms of your mortgage to understand what rights you have and what the lender may do if you cannot make your loan payments. MyHomeSave will see if the mortgage terms have any prescribed methods for avoiding foreclosure in the event that you cannot make your payments on time. MyHomeSave will also review the laws regarding foreclosure in your state because they can vary widely on a state-by-state basis.

Alternatives to Foreclosure

Loan Modification

Loan modification is a process that allows homeowners and lenders to change the terms of a loan in order to help the homeowner stop foreclosure. A loan modification is NOT a new loan; it is the renegotiation – or loan restructuring – of an existing mortgage note. For homeowners behind on their mortgage, or those with a low credit score, a loan modification is often the only option available because they are unable to get approved for a mortgage refinance or a short-refinance. A loan modification can be done in several ways or combination of ways listed below:

  • the loan’s interest rate may be decreased
  • the interest rate could be changed from an adjustable to a fixed rate
  • the period of time the borrower has to pay the loan back can be lengthened
  • the type of loan could be changed altogether

Many borrowers are facing foreclosure because their interest only or variable rate loan interest terms have sky rocketed beyond what they could have imagined. A loan restructuring is an agreeable way for both the lender and the borrower to avoid the cost and hassle of the foreclosure process. Click here to apply

Short-Sale Negotiation

If your house has declined in value and you owe more on the loan than the property is worth, a short sale might be an option to help you **stop foreclosure**. With a short sale, a lender agrees to accept the market value of the home as payoff for the mortgage loan, even if the market value does not cover the amount of the mortgage. A short sale can help the homeowner to relieve the stress of foreclosure and reduce any ongoing credit damage. Here is an outline of steps that MyHomeSave will follow when choosing Short Sale as an option:

1. Property Valuation. This valuation, called a (BPO) Broker Price opinion, must be completed by a licensed realtor. This is a very important part of the process, because in order to process the short sale you need to know the value of the property.

2. Addition of cost of selling the property. Again you will need to use the professional services of a licensed realtor. MyHomeSave can quickly place you with a realtor who is experienced in this area.

3. Determination of amount owed against the property. This will be the total of all loans against the property.

4. Calculations. The total amount owed against the property from the estimated proceeds of the sale. On a short sale, this will be a negative number.

5. Submission of the complete Short-Sale package to lender. Never try to take care of a short sale on your own. MyHomeSave has extensive expertise in this area, understands your situation such as this and is willing to help you.

6. Bringing in Qualified Buyer to buy your property. MyHomeSave has the expertise to properly match buyers and sellers. In today’s difficult mortgage market only financially stable buyers have a chance of getting their loan approved.

When thinking about Short Sale as an option, remember that it is an alternative option to foreclosure. It can typically be closed faster and be less expensive than a foreclosure. If the bank is open to a short sale negotiation and the borrower wants to keep the house, then the bank may also consider a short-refinance.

Loss Mitigation

Loss mitigation covers the many options available to both lenders and borrowers looking for ways to avoid foreclosure. Loss mitigation can be initiated by either the lender or the borrower and negotiated directly between the parties, or by a professional third party working in the best interest of the homeowner. The main goal of loss mitigation is for the homeowner to keep their property and for the bank to minimize their losses. Typically it is necessary for the borrower to arrange a way to pay off their mortgage plus any late payments that may have accrued. The repayment plan is arranged so that the payments are realistic for the homeowner to actually pay off.

Below are some of the loss mitigation options available to borrowers:

Deed In Lieu of Foreclosure

A Deed in Lieu of Foreclosure is an option that can be taken to **avoid foreclosure**. The process requires the borrower turn over the property to the lender, thereby releasing any obligations the borrower may have under the mortgage. Both the lender and the borrower must enter into this process voluntarily. Typically, the process begins when the borrower sends a letter to the lender requesting that they enter into negotiations.

A Deed in Lieu of Foreclosure can offer advantages to both the borrower and the lender. Upon completion of the process, the borrower is immediately free of the debt connected to the defaulted loan. The borrower is able to avoid the foreclosure, and they are often given more generous terms than they would typically receive in a formal foreclosure process. A Deed in Lieu of Foreclosure can be advantageous to the lender because it saves the lender the time and cost associated with repossessing the property (this is also the reasoning behind cash for keys). While a deed in lieu of foreclosure can be a great way for a borrower to remove themselves from a bad situation, there are risks involved. Often, a lender may not be willing to proceed with a Deed in Lieu of Foreclosure if the outstanding amount of the loan exceeds the current market value of the property. Additionally, junior creditors might hold liens on the property which could complicate the process. It is recommended that homeowners contact an experienced professional or real estate attorney before proceeding with a Deed in Lieu of Foreclosure.

Cash For Keys

The cash for keys strategy to avoid foreclosure has been around for years, but has recently hit the spotlight with the exponential rise in foreclosures. Typically, this strategy is used when a landlord defaults on his mortgage and there are renters still in the home. Under a cash for keys arrangement, the bank makes a deal with the occupants of a home that is about to fall into foreclosure and gives the renters 30 days to leave the home. In return, the bank gives the renters a cash settlement to vacate the property in good condition. Checks can average several thousand dollars. As the market increasingly worsens and lenders have become more desperate, the checks have become larger.

The cash for keys strategy is a huge help for the bank as it saves them thousands of dollars in eviction and clean up costs, and allows them to put the house on the market quickly. It is also often a boost for the occupants or renters of the home who are unable to get their deposit back from the landlord that has fallen behind on the mortgage payments. There are times when the occupants of the house are the borrowers as opposed to renters. In this circumstance, if the lender is offering cash for keys, it's likely that the foreclosure process has already been completed and the bank is only looking to get the occupants out quickly and peacefully. A similar, peaceful parting of ways called deed in lieu of foreclosure can be initiated by the borrower to avoid the finality of the foreclosure process.

Cash for keys is meant to help the occupants, but there are times when the bank takes it too far. There have been reports of threats being made if the occupants do not agree to go along with the plan. If you have been approached with a cash for keys offer, it is recommended that you contact an experienced professional or real estate attorney before accepting.

Short-Refinancing

A short-refinance is a loan agreed to by a lender for a borrower currently behind on their mortgage payments. The short-refinance (also known as a short payoff) is usually initiated to **avoid foreclosure**. In this situation, the new loan amount is typically set at the current market value of the home, which is often less than the existing loan amount. In most cases the lender forgives the difference between the new and old loan. A lender will often agree to a short-refinance in order to keep a borrower in the house, as it is generally more cost effective than proceeding with a foreclosure. However, if the market value of the house has dropped dramatically lower the amount still owed on the mortgage, the borrower should consider other loss mitigation options such as a loan modification.

A typical foreclosure can cost a lender $50,000 or more. Therefore, the foreclosure process is usually an undesirable solution for both the lender and the borrower. In the foreclosure process, the lender may be forced to maintain and sell the house, may not receive any payments for up to a year, and be forced to spend time and money associated with the legal aspects of carrying out a foreclosure. The foreclosure process also often ends with the borrower losing their home. With a short-refinance, the lender does lose out on a large sum of money and the borrower is able to keep their house. It is recommended that homeowners contact an experienced professional or real estate attorney before proceeding with a short-refinance request.

Partial Claim

If you do not qualify for a repayment plan or loan modification, you may still be able to obtain a partial claim – if your mortgage is through the Federal Housing Authority (FHA) With a partial claim, you are taking out an interest-free second mortgage through HUD, to assist you in paying the first mortgage. Or as the HUD website puts it: Under the Partial Claim option, a mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI [principle, interest, taxes and insurance]). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. FHA mortgage holders may qualify for a partial claim if their loan payments are more than 4 months, but no morethan 12 months, overdue, and they have the proven financial stability to begin meeting their payments.

Forbearance

Forbearance is somehow similar like deferment. Forbearance allows temporary postponement or reduction of your installments. If you feel it hard to pay the monthly installments and you are not eligible to defer, then you can apply for forbearance.

Under forbearance, the principal amount is not charged with monthly installments but you have to pay the interest as it accrues irrespective to the nature of loan subsidized or unsubsidized. If the borrower fails to pay the interest it will be capitalized.

Forbearance is not granted automatically. You have to apply for forbearance with some documentaries that prove your eligibility. The details of forbearance can be obtained from the loan holder. A borrower can apply for forbearance when :

• not capable to pay due to some physical problem or some serious personal problem

• helping in health sector or undergoing medical internship

• engaged in some specific profession for which forbearance is applicable

• total payments towards student loan is greater than 20% of your gross monthly income

These are some basic conditions which help a forbearance to be granted. A complete list might be available with the loan holders which vary for different states.