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Foreclosure Avoidance Options
Foreclosure can be one of the most devastating financial challenges that a family can face and many times it can be avoided. Below is a brief explanation of other alternatives to Foreclosure.
Forberance or Repayment Plan
It involves the homeowner negotiating with the mortgage company to allow them to repay payments over a period of time.
Mortgage Modification
Involves the reduction of the interest of the loan or at times the principal balance of the loan.
Deed in Lieu of Foreclosure
It is a foreclosure with a "fancy name", it impacts your credit score in the same way. The owner with the lender's approval returns the property back to the lender, it's very rare that it happens.
Bankruptcy
Chapter 7- Liquidation
Chapter 13- Re-organization
Refinance
If there is enough equity in the property and credit is still good, it's a viable option
Short Sale
For most, it is one of the best options. Lender must be convinced that the homeowner can't pay, approval can take 45-60 days Many banks are now initiating Short Sales with homeowners and compesating them for not Foreclosing. These benefits include waiving all deficiency and monetary/relocation compensation.
Walk away and do Nothing
Foreclosure is imminent, there's nothing positive about this action. Many employers( esp. gov''t) are blacklisting employees that choose to do nothing. It is one of the most negative impacts on your credit score and it will take many years to recover.
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