If you have received a Notice of Default because you have missed several mortgage payments in a row, your lender has officially started the process of foreclosure. However, foreclosure is not yet a foregone conclusion. Here are five possible alternatives for you to pursue. The faster you can evaluate and select an alternative, the greater your chance of avoiding a foreclosure.
1. Mortgage Modification. If you and your lender can find a way to come up with a compromise to rework the terms of your mortgage, it’s a win-win for both of you. This is a possibility until your home gets scheduled for auction. Open the lines of communication and see if you can find a solution that is acceptable to both parties.
2. Short Sale. This can be a solution in a situation when your mortgage is greater than the value of your home due to a softening market. Even if the foreclosure process has started, be sure to try to secure a reasonable offer from a buyer yourself. If you can do so before an auction is scheduled, your lender must consider it. A successful short sale is less damaging to your credit score, keeps the situation in your hands, and saves your lender time and money as well.
3. Bankruptcy. Although filing for bankruptcy does halt the foreclosure process, you should take this route if you just need some time to get your financial situation back in order. Talk with a bankruptcy Las Vegas attorney who can explain the pros and cons of taking this route to stop a foreclosure.
4. Lease-Option. Although most loans today contain a clause that prevents a homeowner from essentially transferring the debt, you may be able to work with a lender in a foreclosure situation to allow such a transfer. If you have a buyer willing to take on your current mortgage through a rental option, this option can be good for you, your buyer and your lender.
5. Deed in Lieu. In this case, a homeowner basically signs the deed for the home back to the lender voluntarily. Homeowners face the same penalty to their credit scores as in a foreclosure situation. Lenders worry that homeowners will sue in the future for failure to understand, and they do not want to take on possible second or third mortgages that might exist on the home. This option is rarely used or agreed upon.
Before you succumb your home to foreclosure, be sure to contact a Chapter 7 bankruptcy attorney Las Vegas for counsel. Vohwinkel & Associates has years of experience in helping clients navigate bankruptcy and foreclosure situations successfully, providing support and advice on the best solution for your individual situation.