Foreclosure Alternatives in CA

  1. Loan Forbearance
  • A loan forbearance is not for everybody. It is for those people who are having temporary financial difficulties. Temporary financal restraints such as medical leave, layoffs, union strikes or furlough days may qualify one for a loan forbearance. These people can’t make their payment for a couple of months but they get back to work and they can afford their original payment. Call your bank, provide the financial documentation needed to show that you are out of work and you got back to work and can afford the original payment. They will help you workout your loan forbearance.
  1. Loan Modification
  • FDIC says no 3rd party whether a law firm, real estate brokerage or a private company who is going to offer help on your loan modification can guarantee results and they should never ask for an upfront fee. Save your money and call the lender yourself. Tell them you’re requesting for a loan modification and submit all the financial documents the lender requires. It’s a lot of paperwork but you can save yourself thousands of dollars by filling out the documents and faxing back to the lender yourself.
  1. Refinance To Save Your Equity
  • If you have equity in your property and you’re facing foreclosure, refinance your house. They’ll wipe out all your missed payments. And you’ll probably get a lower interest rate than you’re originally had when you bought it. Keep in mind you must be employed and qualify with a lender to refinance your mortgage.
  1. Short Sale
  • Imagine you bought a house for $100,000 and sell it for $65,000. And the bank says they will wipe out the other $35,000 that you owe them. Short sale has three benefits: save your credit, you are able to buy another property in 18-36 months; the bank cannot come after you for the difference that you owe. Possible added bonuses include the lender allowing you to stay in the property during the 3-6 month negotiation period and you may even be rewarded with up to $3,000 in relocation money for choosing to do a short sale instead of letting the property go to foreclosure.
  1. Deed In Lieu Of Foreclosure
  • Unlike in short sale you are not selling your property. All you’re doing is going to the bank to say you can’t afford the property any longer, moving your belongings out and literally giving them the keys to the house. Like with other foreclosure alternatives you need the bank’s written approval to do conduct a deed in lieu.
  1. Filing Bankruptcy
  • If you’re considering filing for bankruptcy please seek out the council of an attorney. From my experience, past clients who file for bankruptcy have the court put 90 day hold on any foreclosure or sales activity of their property while they collect all of the assets and liabilities. The court then will make a decision on whether you get to keep your property or not. That helps you avoid foreclosure temporarily but there is always a risk that the court determines that you can not keep the house and must short sale it.
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