Options To Avoid Foreclosure For Albuquerque Homeowners
The real estate crisis had a negative impact on Albuquerque, Rio Rancho, Corrales, Bernalillo County, Sandoval County, and Valencia County Homes. The national financial crisis caused stress and heartache for many New Mexico families. Foreclosure is a devastating financial challenge for New Mexico families and one that may be avoided. Options are available to avoid foreclosure. Here are some questions and answers that may help you understand your options to avoid foreclosure:
Read this article to Learn More about how to Avoid Foreclosure for Albuquerque homeowners.
What is Forbearance?
Forbearance or repayment plan is one way to avoid foreclosure and involves negotiating with the mortgage company to repay missed payments over a period of time. Typically homeowners will make their current mortgage payment and an additional payment of a portion of the missed payments they owe their mortgage company. Call your mortgage company and attempt to negotiate a payment plan that you can afford and the mortgage company will accept.
Ask your lender how the additional payments will be handled. It is critical to stay current on your payments if you are successful in negotiating a repayment plan.
- Benefit: Allows you to avoid a foreclosure, keep your home, and make back payments over time.
- Concern: Requires you have the ability to pay not only your current mortgage, but also a portion of the missed payments owed. Mortgage companies may require you to meet certain criteria for a repayment plan.
What is Reinstatement?
A reinstatement is the best solution to avoid a foreclosure. However it is often the most difficult. You request the total amount owed to the mortgage company to date and make a payment in full. This solution does not require the mortgage company’s approval and will reinstate your mortgage.
- Benefit: Does not require approval by the mortgage company.
- Concern: You must be able to pay all missed payments, fines, penalties, and associated fees.
Can I Refinance My Home To Avoid Foreclosure?
Yes, refinancing your home is another method to avoid foreclosure. You must have sufficient equity in your property. In addition, you must have good credit and meet a lender’s financial requirements to refinance your mortgage.
- Benefit: This will allow you a fresh start on your mortgage and bring you current on your mortgage.
- Concern: You must have adequate credit in order to meet the mortgage company requirements for a refinance.
What is a Mortgage Modification?
Mortgage modification involves the reduction of one of the following: the principal balance of the mortgage, the interest rate on the mortgage, the length of the mortgage, or a combination of these. A mortgage modification can be difficult as most banks are not willing to provide a mortgage modification. This is a great plan if the bank agrees to a loan modification.
- Benefit: Reduces the monthly mortgage payment and may reduce the principal balance of the mortgage.
- Concern: Mortgage Company must be actively pursuing mortgage modifications. Requires that you qualify for the new mortgage payment and will often require full documentation.
Can I Rent My Property To Avoid Foreclosure?
Yes, renting your home may be an option. Use the rental income to make your mortgage payments. You will need to make up the missed mortgage payments, fees, and penalties. This may be a great option to avoid foreclosure for you.
- Benefit: Allows you to keep your property and enjoy the tax benefits a rental may provide.
- Concern: There are many issues that may arise with owning a rental house.
Can I Sell My House To Avoid Foreclosure?
Yes, you can sell your house if you have sufficient equity in your home to avoid foreclosure. Make sure your real estate agent understands the foreclosure process in your area. You may also look into selling your house to an investor. Myers & Myers Real Estate may be interested in purchasing your home. This may be a great option for you to avoid foreclosure.
- Benefit: You will keep some of your equity and avoid a foreclosure.
- Concern: You may not have sufficient equity to sell your property and cover all normal closing costs.
What is a Deed In Lieu Of Foreclosure?
Deed in lieu of foreclosure allows you to return the property to the mortgage company and avoid the foreclosure process. This is also known as a friendly foreclosure. Mortgage company approval is required for this option and you must vacate the property. The mortgage company may require you to attempt to sell your house with a licensed Real Estate Professional. This may be a great option to avoid foreclosure.
- Benefit: Many times in a successful deed in lieu, the mortgage company will agree to release you from a deficiency judgment.
- Concern: Requires you to vacate the home and a deed in lieu of foreclosure may be reported to credit bureaus.
Will A Short Sale Help Me Avoid Foreclosure?
Yes, a short sale may help you avoid foreclosure. Do you owe more on your primary home than it is worth? A short sale may be the answer to help you avoid foreclosure. Consider hiring Myers & Myers Real Estate to market and sell your property through the negotiation of a short sale. A short sale typically requires the property to be on the market and you must have a financial hardship to qualify. Hardship can be simply defined as a material change in financial stability. Acceptable hardships include but are not limited to: mortgage payment increase, divorce, excessive debt, job loss, forced or unplanned relocation, and more. A short sale may be an option to avoid foreclosure.
- Benefit: A short sale allows you to salvage some of your credit rating and avoid foreclosure. This also keeps foreclosure off your public record. In many cases a short sale will allow you to avoid a deficiency judgment. It is possible you will qualify for another mortgage in as little as 24 months as opposed to five years for a foreclosure.
- Concern: Short sales are a difficult process in and are best served by contracting with a qualified short sale real estate broker to guide the way.
Is Bankruptcy An Option To Avoid Foreclosure?
Yes, bankruptcy may be an option for you to avoid foreclosure. Many have marketed bankruptcy as a solution to avoid foreclosure. This is only true in some states and situations. If you have non-mortgage debts that cause a shortfall of paying your mortgage payments, a personal bankruptcy will eliminate these debts. If you are considering bankruptcy, consult a bankruptcy attorney to understand if bankruptcy is your best option. Bankruptcy may be an option to avoid foreclosure.
- Benefit: Does not require mortgage company approval.
- Concern: If you cannot afford your mortgage payment, a bankruptcy will only stall the foreclosure process. Bankruptcy is damaging to your credit scores and can only be declared once every seven years.
Avoid Foreclosure with the Service Members Civil Relief Act.
Active members of the military experiencing financial distress due to deployment. You can show your debt was entered into prior to deployment may qualify for relief under the Service Members Civil Relief Act. Service Members can contact the American Bar Association to tap into the network of attorneys willing to perform these services. This may be a great option to avoid foreclosure.
- Benefit: If qualified, this will lower your mortgage payments and payments on all consumer debt.
- Concern: You must be active military to qualify.
This represents only a summary of some of the solutions available to avoid foreclosure. Contact Myers & Myers Real Estate today at 505 401-7500 for a free confidential evaluation of your individual situation, property value, and potential options. We will help you avoid foreclosure.
John Myers has earned the prestigious Certified Distressed Property Expert® (CDPE) Designation. John has completed extensive training in how to avoid foreclosure with an emphasis on short sales. The knowledge obtained by being a CDPE is invaluable in educating and assisting New Mexico homeowners how to avoid foreclosure.
FREQUENTLY ASKED QUESTIONS
What is a Mortgage or Loan Modification?
This process is one method to avoid foreclosure and allow you to stay in your home when you can no longer afford their current mortgage. A mortgage or loan modification is a process through which your mortgage company changes any or all of the following:
- Interest rate on your mortgage interest rate
- Principal balance on your mortgage.
- Terms of your mortgage (example: from an adjustable to a fixed rate).
Why Would A Mortgage Company Modify My Mortgage?
Mortgage companies have realized that in some cases the best solution is to work with you to reduce your mortgage payments or possibly improve your mortgage terms. The average foreclosure can cost a mortgage company 30-50% of the value of a property; keeping you in your home may be the best option for everyone.
What Do I Need To Qualify For A Mortgage Or Loan Modification?
You will need the following information for your mortgage company to consider a mortgage or loan modification:
- Gross monthly gross (before taxes) income of your household. Including recent pay stubs or documentation of income you receive from all sources
- First mortgage information, such as your monthly mortgage statement
- Second mortgage information or home equity line of credit on your house
- Account balances and minimum monthly payments due on all of your credit cards
- Account balances and monthly payments on all your other debts such as student loans and car loans
- Your most recent two years income tax returns
- Information about your savings and other assets
It may also be helpful to have a letter describing any circumstances that caused a reduction in your income such as job loss, reduction in salary, divorce, family illness, etc. or an increase in your expenses such as increase in mortgage payments, medical payments, etc.
Do I Qualify For A Mortgage Or Loan Modification?
The first call you make should be to your mortgage company. Have the information above ready to discuss with them and call your customer service line to ask them what options you have available to avoid foreclosure. It may take multiple phone calls to get in contact with the right person, be persistent. If the person you speak with does not understand what you are asking, ask to be referred to their supervisor or one of the following departments:
- Loss Mitigation
- Mortgage or Loan Modification
What Is A Home Affordable Refinance?
You may be eligible for a Home Affordable Refinance if Freddie Mac or Fannie Mae owns your mortgage. This will allow you to refinance your home and often lower your payments. This may be a good option for those trapped in a high interest rate mortgage.
Do I Quality For A Home Affordable Refinance?
According to the resources released by the federal government, the following are a list of qualifications:
- You are the owner occupant of a one- to four-unit home
- The loan on your property is owned or securitized by Fannie Mae or Freddie Mac
- At the time you apply, you are current on your mortgage payments. You haven’t been more than 30 days late on your mortgage payment in the last 12 months. If you have had the loan for less than 12 months, you have never missed a payment.
- You believe that the amount you owe on your first mortgage is about the same or slightly less than the current market value of your house.
What is a Deficiency Judgement?
A deficiency judgment is a court ruling that allows your mortgage company to collect additional funds from you when the sale of your home is short of paying off the full debt. The full debt includes costs incurred by your lender to foreclose on your home. A deficiency judgement can be substantial.
I Don’t Qualify For A Mortgage Modification, Can’t Afford My Home, And Owe More Than It’s Worth, What Can I Do?
If your Mortgage Company or servicer will not work with you to reduce your payment, you may want to consider a short sale. A short sale allows you to sell your home for less than what you owe and avoid foreclosure.
Do I Qualify For A Short Sale?
The qualifications for a short sale include any or all of the following:
- Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
- Monthly Income Shortfall – Your Mortgage Company will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The mortgage company will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
Myers & Myers Real Estate can Help You Avoid Foreclosure!
We are experts in selling your home including short sales. We have successfully negotiated many short sales with mortgage companies for our clients.
Check out all of our great tips to sell your home fast and for top dollar. Contact us for a free home valuation.
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