Hardship Loan Modification
Hardship Loan Modification
- A Hardship Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.
Hardship Loan Modification - Mortgage Forgiveness Debt Relief Act
December 20th 2007 President Bush signed the bill ensuring that any debt forgiven on a mortgage secured for a principal residence will not be taxed. This important legislation is one more step in helping homeowners through the fallout of the sub-prime lending boom. Realtors have been advocating such a change to the IRS tax code for nearly 10 years and we are proud of this recent victory.
A Short Sale is when a lender accepts a discounted sale price on an existing mortgage note to avoid a possible foreclosure auction or bankruptcy. The buyer purchases the property directly from the lender at a discounted sale price in lieu of the seller’s mortgage note balance. Example: A homeowner, who is facing foreclosure, has an existing first mortgage of $250,000. Buyer submits a written offer to the lien holder for $200,000, which may be accepted as full payment for the loan, Therefore releasing the seller from the difference.
Hardship Loan Modification - Reinstatement
The Reinstatement amount is the total amount that is past due including late fees and Attorney costs. This amount is what is required to bring your Mortgage current. Because of your financial circumstances in the past, you may be facing a sizable amount of past-due fees, including back payments, late fees and legal expenses. If you are able to pay the total in full to bring your payments to current status by a specific date, you may be eligible for a Reinstatement plan. A Reinstatement will offer you the quickest method for resolving your mortgage foreclosure. With your foreclosure resolved you can enjoy the security of your home.
Hardship Loan Modification - Repayment Plan
The most common way of resolving a loan default is to work out a plan which will let you repay part of the delinquency each month, along with you regular monthly installment. Most of our clients will be eligible for a Repayment Plan for the amount they are delinquent if their financial circumstances have stabilized. Most of our clients have realized a short term financial hardship that has caused them to become delinquent. They are now financially back on their feet and need help getting caught up. We will negotiate with your lender to re-distribute your past-due amount over a set period of time, usually 18-24 months, depending on your circumstances.
Hardship Loan Modification - Loan Forbearance
Some of our clients are eligible for Forbearance, which will give you time to gather your assets. In a Forbearance plan, you are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender (if in agreement) will then temporarily cease legal actions.
Hardship Loan Modification - Deed-in-lieu of Foreclosure
The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principle advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. Basically, you forfeit all rights to the property and the property will be conveyed to the lien holder. In exchange for the deed-in-lieu, the lender may waiver all deficiency judgment rights.
The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure.
Understanding Short Sales
As foreclosure rates hit record levels, more sellers are turning to short sales as a way to avoid foreclosure. So, how does it work? In a short sale, the seller arranges with their mortgage lender to accept a price that's less than the amount they owe on the property. As part of this arrangement, the lender typically agrees to forgive the rest of the loan. As a result, the seller doesn't have to go though a foreclosure, the buyer picks up a property at a discount, and the lender avoids taking on the burden of unloading the property.
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