Struggling home owners across the country are being helped to fight foreclosures for sale by various programs – like Loan modification, Short Sales and deeds in lieu.
Loan modification is led by the government’s HAMP (Home Affordable Modification Program) which has targeted home owners who were refused loan modification by their lenders. There are a variety of options available under HAMP. The duration of the loan can be extended or the monthly payments and interest rate reduced or both these modifications can be combined.
The HAMP program is free for home owners but the procedure of application requires many details. The first criteria for lenders are that home owners must have defaulted on their payments. Secondly, the home owner must be staying in the property that is in danger of being foreclosed. This Program ends in December 2012.
Short sales have helped home owners who are under water on their mortgages and are facing a spate of financial problems. Being underwater means that the value of the home has slipped below the amount owed on the loan. Home owners have seen the slump in value of their homes over the past months and some have found it difficult to make their mortgage payments. Many homeowners have found the short sell option a good way to get rid of their under water homes and have the remaining part of their loan forgiven by lenders.
Deeds in Lieu of foreclosures have become popular with home owners who have not been able to modify their loans under the loan modification program but still want to avoid foreclosures. The signing over of deed to the home may negatively affect the credit score of the home owner but it is definitely a better option than facing foreclosure. There are many lenders ready to work with borrowers in this method of avoiding foreclosures. Some lenders may also allow home owners to stay in their property for several months till they find alternative living arrangements.
Alternatives to foreclosures are not popular with all lenders but many are ready to offer the above three options to struggling home owners. Home owners denied loan modification via HAMP may find it possible to negotiate with their lender and arrive at a reduced payment plan, an alternative modification, or follow up with short sales or deeds in lieu of foreclosures.
Housing counselors with the Department of Housing and Urban Development (HUD) are ready to help home owners but the latter are advised to consult their lenders directly. They will be able to arrive at an alternative payment plan and alternative living arrangements.
