The Bank is Threatening to Foreclose – How Can I Keep My Home?
If you live in New York, and are currently dealing with the threat of having your house foreclosed on, there are several retention options for you to think about.
What is a Retention Option?
In “bank speak”, retention options are ways for a homeowner to remain in their home, even if they’re behind on their mortgage payments. These options include:
- Mortgage Loan Modification
- Friendly Sale / Friendly Short Sale
- Payoff / Short Payoff
- Reinstatement / Short Reinstatement
- Forbearance
- Refinancing
Mortgage Loan Modification
This option allows you to rework your current mortgage to make your monthly payments easier to manage. You, your foreclosure lawyer, and your mortgage holder will need to renegotiate your loan for better terms to make it a loan that can work for you. The interest rate can be reduced, the term made longer, and a partial deferment can be put at the end. Be aware that this often results in a final larger loan than what you started with, since the modified loan absorbs what you owed into the new principal in order to make you current on the new loan. To make the modification work, your lender may decide to defer part of what you owed to the back of the loan, so you don’t have to pay what you owed all at once. Your new modified monthly payments will usually be about the same or a bit lower than your old mortgage payments.
There’s more to a mortgage loan modification than simply asking for it. You’ll need the help of your foreclosure lawyer to get all your documents together, schedule a review with your lender, negotiate the terms of the modified loan, ask for a temporary modification trial where you can prove you can make the new payments, then finally sign off on the new loan with the lender. And if at any point your lender isn’t acting in good faith, your foreclosure lawyer will be able to appeal or demand a review of the decision.
Friendly Sale / Friendly Short Sale
If you know you could eventually pay back what you owe on your mortgage, but your lenders won’t give you the time you need, you may want to look at a friendly sale. For this, you will need a “friendly ally” which is someone like a friend, family member, or real estate investor, who has the money to buy your house from you. Under a friendly sale contract, the ally will purchase your home, pay off the original lenders, and then allow you to stay where you are and rent your home. Once you are back on your feet and have rebuilt your credit, the ally will then sell you back your home. This option can be fraught with danger if you trust the wrong ally, so make sure your foreclosure lawyer is part of all negotiations and contracts.
Payoff / Short Payoff
If you suddenly won the lottery or came into an unexpected inheritance, you can also stop a foreclosure by simply paying off the entire mortgage. And if your house is now worth less than you paid for it, your foreclosure lawyer may be able to negotiate a short payoff as opposed to a short sale.
Reinstatement / Short Reinstatement
Similar to the above, if you suddenly get access to enough cash to catch up on what you owe, your lender can simply reinstate your current mortgage, stopping the foreclosure process. And again, if the value of your home has decreased dramatically, talk to your foreclosure lawyer about negotiating a short reinstatement with your lenders.
Forbearance
Mortgage forbearance is a temporary pause in your payment schedule. You, your foreclosure lawyer, and your mortgage holder will need to negotiate a specific time during which your monthly bill will either be lowered or waived. At the end of the agreed time limit, you will have to pay the missing months in full. This can either be as a lump sum or part of a deferment agreement which can add your missing payment months onto the end of your loan.
Refinancing
Normally, trying to refinance a loan where you are currently in default is pretty much impossible. However, similarly to a friendly sale, you may have someone in your life who can co-sign a refinancing loan to bring your mortgage up to date. This can also be a tricky situation, so speak with your foreclosure lawyer to see if this is a viable option for you.
For more information about retention options, and the tools that a good foreclosure attorney can use to help you, click here – https://www.ny-bankruptcy.com/retention-options-in-general-for-distressed-real-estate
What to Do Next
There is a lot to know about the various retention option programs and it can easily get overwhelming. If you’d like to talk directly to a compassionate, knowledgeable, human being, reach out to New York foreclosure attorney Ronald D. Weiss, P.C. for a free consultation. He can tell you what, if any, mortgage delinquency plan is right for you, and help you get the process started. Call 631-212-1046 and take the first step to a fresh start.
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