If you are in arrears on your mortgage payments, are in default on your loan, or are confronting foreclosure, you may be able to find an alternative to foreclosure. You may be able to keep your home by cooperating with your lender, devising methods of lowering your mortgage payments, or becoming eligible for a foreclosure assistance program that is financed by the government.
One alternative to foreclosure is to enter into an arrangement with your servicer to make missed payments over a period of time, and to remain current going forward. The more time it takes you to be caught up with your payments, the more likely it is that you will require approval from your lender to implement the recommended plan. If your foreclosure sale date is approaching, you should make a request in writing for an extension of time to create a repayment plan or combat the foreclosure.
Statutory Reinstatement or Redemption
Under the law, several states give you the right to reinstate your mortgage, or make it current. Or the state may permit you to redeem, or pay off the loan in its entirety. Generally, you are required to exercise either of these rights prior to the foreclosure sale date. However, some states allow you a certain amount of time following the sale date to redeem the mortgage by fully paying off the loan, with interest and costs.
If you are financially able to reinstate the mortgage, you can work out a plan with the servicer concerning your missed payments. However, if you require your payments to be lowered, reinstatement is not an option. Rather, you will have to redeem the mortgage by refinancing it at a reduced interest rate.
You could enter into a forbearance agreement in which the servicer, or lender, promises to lower or halt your mortgage payments for a certain amount of time. In return, you agree to pay the entire amount at the conclusion of the forbearance period, plus an additional amount to make the missed payments.
Mortgage modifications are intended to reduce your monthly payments over a lengthy period of time. Your servicer may do one of the following:
- Lower the interest rate of your mortgage
- Change from a variable rate to a fixed-rate mortgage
- Lengthen the repayment period of the loan
- Re-amortize the loan
If you would like to discuss your alternatives to foreclosure, call the bankruptcy attorneys at the Law Offices of McDowell Posternock Apell & Detrick PC.
The article above: (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for personalized legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel about your specific matter.