Options for Homeowners Facing Foreclosure
Now that we know why a lender would consider a short sale, why would a homeowner consider a short sale? Even when behind on payments and owing more than their home is worth sellers have several options of what they can do with their property. Their options include, but are not limited to:
• Refinance their loan - most homeowners behind on payments no longer have the credit or the cash required to refinance their loan.
• Negotiate a Forbearance Agreement - a Forbearance Agreement is a plan put together by the lender to bring the note up to current. It includes a modified payment plan designed to catch up the missed payments meaning the new payment is almost always higher than the previous payment. Typically only borrowers with short term hardships will qualify.
• Sell their Property through an Agent – It’s tough to sell if they have no equity, an agent can also offer a short sale solution
• Work with an Investor – you can help them negotiate a short sale for you.
• Loan Modification – Work with the bank to modify the terms of your loan, so you are able to afford the payments.
• Do nothing at all – it’s their right to do nothing at all and let a Foreclosure happen.
Looking at the homeowner’s options we can see that in most cases it basically comes down to two options, pursue a short sale or go through a foreclosure. So what’s the difference?
