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The last thing your
lender wants to do is foreclose. They will be forced to do so
but would rather entertain other options if they make sense and
forbearance agreements (loan modifications) make the most sense in
this difficult market. Lenders are losing money as never
before. Lenders are closing their doors as never before. A
'work-out' that converts a non-performing loan (or a loan already in
default or foreclosure) to a performing loan benefits both lender
and homeowner alike. Once a lender or servicer agrees to allow
forbearance it's very important that you follow through on the
promises you make to them.
This is clearly the
preferred 'work out' for most homeowners facing possible
foreclosure. Forbearance gives you the opportunity, at a minimum to
pay off your arrears over a period of time but at its best it allows
you to re-cast your loan based upon market conditions and your
ability to pay. Remember, the bank must approve a forbearance so it
is important for all necessary groundwork to be done before the
negotiations begin.
Like any other
method of anti-foreclosure measures, loan modification seeks
approval from the lender. But unlike other measures, in loan
modification, homeowners can assert rules in prevailing real estate
conditions. If a homeowner found out that the property that they are
making mortgage payments on is not worth the amount they are
shelling out then loan modification is a way to adjust future
payments. If the homeowner finds that their homes are worth every
penny that they are actually paying for it, but still don’t want to
lose it in a foreclosure or short sale, then loan modification gives
them a sense of control to their situation.
There is no one answer, there is no
one formula. What works for one borrower with their bank may not be
accepted with a different lender. The key is being aware of all
alternatives and working with lenders to explore every possible way
to restructure the loan so that it will continue to perform and the
foreclosure will be avoided or discontinued.
Don’t wait until
you have been served with foreclosure papers. Many of our clients
come to our offices after they have been served. Negotiating a
forbearance agreement can be tedious and time consuming. Legal fees
for your lender's attorney mount up once they have served you in a
foreclosure action and acting early lets work be done without the
additional pressure of an impending sale, pressure banks have shown
little compassion for. Lenders are over-whelmed with these requests
and can can take up to ninety days to review your file so
planning early is essential.
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