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Daniel Solutions, Lawyer (JD)
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I am 2 years behind on my mortgage payments. I need to know

Customer Question

I am 2 years behind on my mortgage payments. I need to know what if anything I can do to save the house. I also have someone who is willing to put the house in ther name and take over the payments.
Submitted: 5 years ago.
Category: Legal
Expert:  Daniel Solutions replied 5 years ago.

What you're describing would be Assumption of Mortgage where someone would take over the mortgage payments, but the bank would need to approve the Assumption of Mortgage after reviewing the new person's credit history.

 

 

The best way to avoid foreclosure is to prevent the filing of a Notice of Default. Lenders do not want to foreclose but will file a Notice of Default to protect their interests, if necessary. If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender.

Don't put it off, be embarrassed or ignore letters from your lender because those responses will make the situation worse, not better. Depending on your particular situation and hardship circumstances, here are some options your lender might propose to you:


•Time to make up your payments.
Lenders might agree to wait before taking legal action against you and let you work out a repayment plan that is affordable for you. This is called forbearance.

•Forgiving a payment.
If you can agree on a way that you will be current after missing a payment or two (without the means to pay it back), the lender might give you a break and waive your obligation. This is called debt forgiveness, and it rarely happens.

•Spread out the missed payments over a longer term.
For example, if your payment is, say, $1,200 a month, the lender might let you add $100 a month to each payment for a year until you are caught up. This is called a repayment plan.

•Changing the terms of your loan.
If your mortgage is an adjustable loan, the lender might freeze the interest rate before it increases or change the interest rate to a more manageable rate for you. A lender might also extend the amortization period. This is called a note modification.

•Add the back payments to your loan balance.
If you have sufficient equity and meet the lender's lending guidelines, the lender might increase your loan balance to include the back payments and re-amortize the loan. This is called a refinance.

•Make a separate loan to you.
Certain government loans contain provisions that let borrowers who meet specific criteria apply for another loan, which will pay back the missed payments. This is called a partial claim.

Ways to Stop Foreclosure
When the lender files a Notice of Default, your options are limited. That is why it is better for you to call your lender before falling behind on your payments, because lenders are often reluctant to work out repayment schedules after foreclosure proceedings have been commenced.

You will be given a certain time period to bring the payments current, pay the costs of filing the foreclosure and stop the foreclosure. This is called reinstatement of your loan. If you cannot make up the missed payments and the lender will not work with you, here are a few other options to stop foreclosure:


•Sell Your Home.
Interview real estate agents to get an opinion of market value and average DOM to sell your home. You might be tempted to hire a discount broker, but many sellers feel they need the exposure and marketing that full-service brokers offer. Compare both to determine which best meets your needs and time frame.

•Consider a Short Sale.
If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale affects credit but it's not as bad as a foreclosure. You or your agent will need to negotiate with your lender to find out if the lender will cooperate on a short sale. This is called a pre-foreclosure redeemed.

•Sign a Deed-in-Lieu of Foreclosure
This is called deeding the home back to the lender. The homeowner give the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Lenders tell me that deeds-in-lieu of foreclosure affect credit the same as a foreclosure.
The lender might also work an arrangement where a home owner can remain in the home until finding a place to move into. Owners in default should negotiate the right to retain occupancy, arguing that if the lender followed through on the foreclosure, an owner would still enjoy the right of possession during that procedure.

Daniel Solutions, Lawyer (JD)
Category: Legal
Satisfied Customers: 9934
Experience: Practing General Attorney,
Daniel Solutions and 2 other Legal Specialists are ready to help you
Customer: replied 5 years ago.
Do you think I need to file bankrupt
Expert:  Daniel Solutions replied 5 years ago.

Bankruptcy may be an option.

 

A bankruptcy will affect your future credit, your relationships and your self-image. But it can also improve your short-term quality of life and possibly keep you from losing your home, car and other essentials.

Personal bankruptcy is generally considered the debt management tool of last resort because the results are long-lasting and far-reaching. It's the financial equivalent of major surgery -- not something you should undergo unless it's absolutely necessary. You need to study the pros and cons carefully before making a decision. Then, if you decide bankruptcy is the way to go, it's important to do it right.

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