Foreclosure Does Not Mean The End Of The World

October 8th, 2007

It is always better to lift the veil off the enemy so as to know better and be well prepared. The main focus is not on what has already happened – that is the foreclosure - but on what will happen in the future – the credit record.

If the borrower knows that there is no other way out of the mortgage mess it is best to sell off the unit and buy something more affordable and less taxing on the peace of mind. Sometimes the parent mortgage company will offer refinancing alternative or modify the loan to avoid foreclosure. One can also look around and compare the options going around with credit unions, banking institutions and mortgage houses.

For those who are only behind in one or two payments and hopes to be able to tide over the money crunch, the lenders might throw the option of Forbearance. It permits the borrower to pay the arrears with the current dues within the next 3/6 months. To avail of this the lender must be contacted well before more dues pile up.

The next alternative for those who can see the light at the end of the tunnel is to catch up on dues by taking a fresh loan from a friend or any other source. There are hard-money-lenders who can be located on the Internet. The loan amount is small but the interest rate is high. This path is best for those who are sure about being to pay in the future and income is assured.

Bankruptcy is another way out that can be taken before the foreclosure hones in. It stains the credit history for about a decade and is definitely not the recommended cup of tea for all. For details and ground facts the best source will be a bankruptcy attorney.

Lenders are not too keen on foreclosures and might well offer the option of deed-in-lieu-of-foreclosure to avoid costly time consuming foreclosures. The borrower hands over the deed and a foreclosure is not reported by the lender.

The best bet is to sell the property before the foreclosure. This will minimize credit damage. In a short sale the property is sold for less the amount than what is owed by the borrower. Lenders were at one time adamant but with property rates falling negotiations are more easily reached then before.