OK, I didn't know that.
Too, you only get 1 chance to apply for either HAMP or HARP. So if rejected for 1 you can't apply to the other and get accepted. I don't know why (it doesn't make sense whatsoever) but those are the rules of HAMP/HARP.
So, if you can't qualify for those - your options are limited.
The most common, but not all of the available alternatives, to foreclosure through loss mitigation include the following:
1. Forbearance: Used after a temporary loss or reduction of income. The homeowner begins making monthly payments again plus adds a little extra each month to make up the delinquent amount owed.
2. Loan Modification: Modified terms of the loan to lower the payments when the homeowner has encountered an unexpected difficulty.
3. Deed-in-Lieu of Foreclosure (consent foreclosure): Homeowner releases the deed of the home to the lender if they agree to not complete the foreclosure. The lender skips the time and cost of a foreclosure and the homeowner protects their credit. (similar is a Consent in Foreclosure) Uncontested foreclosure is where the debtor/owner agrees in writing not to contest the foreclosure or the eventual sale. This is a contract whereby the debtor/owner gives up rights to contest or defend the foreclosure.
4. Short Sale: A short sale is a sale of real estate
in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens' full amounts, and whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties.
5. Short Refinance: This is refinancing of the home out of foreclosure at a reduced value. Sometimes there is not enough to payoff existing mortgage, pay closing costs
and have a low enough loan-to-value ration to close a new loan. Maybe the home's value has even dropped. On some occasions lenders may be willing to accept less money on a refinance. The homeowner closes on a new mortgage to pay of the loan that is in foreclosure.
6. Partial Claim: This is an interest free loan available on FHA
homes. The original loan must be less than 12 months delinquent, but more than 4 months delinquent. The partial claim is paid off after the original mortgage is paid off.
7. Deferment: This puts off or postpones the mortgage payments until a later time - usually up to a maximum of up to six months.
8. Obama HAMP/HARP plan: The main components of Obama's foreclosure-avoidance plan are home loan modification and loan refinancing. The provisions of this plan have created a chance for millions of people to re-finance or modify their present mortgage.
9. Bankruptcy: a Chapter 13 debt restructuring. This does NOT modify the loan but allows an individual or couple up to 5 years to become current as to any outstanding mortgage arrearages.
Your only options are for a refinance through WF, deed-in-lieu of foreclosure, short sale, or bankruptcy.
I would think that WF might modify the existing loan if you contacted them and said it's an either we modify the loan or we file bankruptcy.
Although WF is difficult to deal with - they are sometimes agreeable if the market is down and they have a good owner/debtor they are dealing with.
I would contact them and see if they are willing - otherwise your options are limited to a short sale, deed-in-lieu or bankruptcy.
A short sale isn't a problem - but would give you an out and they would probably agree to that.
They don't want you to file bankruptcy because then they will own the property or be stuck dealing with the issue for 5 years.
So I suggest you contact them and see if they themselves won't modify your mortgage.
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