Recently we were asked what options a homeowner has once they have received a Notice of Default from their lender.
The first decision you to need to make is whether you want to stay in your home or have you had enough and want to get out. Today we are going to discuss what to do if you decide to stay in your home.
Your first option would be to bring the loan current. While this might be the most difficult since you will need to pay the total amount past due and all interest and late fees associated with the loan. This option is your legal right to do within 90 days of your receiving the Notice of Default. Currently with the lenders having so many delinquent accounts, the lenders are more flexible in their negotiations. You will need to show your ability to maintain the loan after the agreement on how to repay the funds. You can bring in your entire past due amount. Most of the time, this option is not available since you have already been behind. You might be able to arrange an increase in monthly payments until the loan is back to current status. This repayment schedule will be for a short period of time i.e. 12 or 24 months. Always remember this option will require you to show your ability to make the additional amount plus your regular monthly payment. Because of the times, the lenders may be more lenient but they are still going to make a business decision and that is "Over time is this going to be a good loan for us?" You need to do the same thing.
The second option is to work with your lender on a "forbearance plan". This plan is very effective if you are still able to make mortgage payments but the payment amount has become too great for you to continue. A forbearance plan with the lender is a formal written agreement between you and the lender. The agreement would normally be to reduce or suspend monthly payments for a specific period of time. During this agreement you will either pay only a portion of the mortgage payment or not make any payments at all. At the end of the plan, you would be required to start making your regular monthly payment as well as pay any additional funds to make up the past due amount. Basically, you have just had everything deferred until you could afford to repay the amount due. This option is normally available to you if you have recently experienced a loss in income or illness.
Upon completion of both options the lender will reinstate of your loan. The primary difference between the two is bringing the loan current requires you to bring the financial resources to the lender while the second option has the lender believing that with some relief you will be able to continue on with the loan.
Next week we will discuss the options you have if you want just get out from your home.
About this Author
Tom Fitzgerald writes about real estate investments and its relationship to the financial community in his blog http://www.GreatDayForRealEstate.com. His writings can serve as a primer for the new investor as well as a resource for the experienced investor.
Article Source: http://EzineArticles.com/?expert=Tom_Fitzgerald
