Current Workout Programs Accepted Most Banks
December 10th, 2008
Categories:Real Estate News
Current options granted by the mitigation departments generally fall into one of three categories, homeownership retention, property disposition options, and adversarial legal options.
Home Ownership Retention Options:
- Loan Modification:
This option changes the terms of your loan without refinancing and may include adding delinquent payments to the balance of your loan, which would be repaid over the remaining term. - Repayments/Special Forbearance Plan:
In this situation your lender may agree to delay any foreclosure or other legal action fi you promise to repay the delinquent amount over a specified period of time. - Partial Claim (FHA Customers Only):
Here, you may be able to receive funds from HUD to bring your loan current. Once all of the required documents are gathered a request is submitted to HUD to advance the funds necessary to bring the loan current.
Property Disposition Options:
- Short Sale:
You may be able to sell your property at its fair market value even if the sales proceeds are less than what is owed on your plan. At the time of this article, a short sale seems like the most logical of solutions for banks, however many banks are painfully slow to respond to contracts and often the time involved with closing a deal is the reason why most deals fall apart on the table. - Deed-in-Lieu of Foreclosure:
The property deed is essentially given to the lender to avoid the foreclosure process and theoretically avoid credit ramifications. Check with your tax adviser before handing the deed back.
Adversarial Legal Options:
The options listed above are “voluntary” and the options following are considered “adversarial”
- Involuntary Deed-Back:
The borrower simply send the deed back to the lender and does not wait for approval. - Action on Loan irregularities:
Many borrowers are in their present adverse positions because they were victim of wrongful bank, real estate, appraisal practices and are entitled to legal claims. In this situation, they can threaten to take legal action and the bank may negotiate a new loan. - Bankruptcy:
Bankruptcy can “cram down” values to “actual values” or discharge debt enterely, possibly even saving a homestead exemption. When “crammed down” the mortgage is reduced to the value of the property and the balance becomes an unsecured debt. The borrower then pays on the new home value/loan amount.
Related posts:
- What Banks Have Loan Workout Programs?
- Government Workout Programs
- Banks Get Wise?
- Time's Quickly Ticking for the $8,000 Home Buyer Tax Credit
- Big 3 – Loan Programs