Experiencing foreclosure or defaulting on a mortgage loan can be a scary situation and can have a negative impact on homeowners credit scores. Short sales, assumption, and deed in lieu of foreclosure are all programs that force mortgage holders to lose their homes but without the financial and credit consequences of foreclosure.
For mortgage holders who have fallen behind in their monthly payments and unable to catch up there are several relief programs like loan modification and mortgage refinance. These programs can help them modify their mortgage terms and retain their homes.
Unfortunately not every struggling home owner is eligible for these programs and some are left with no way to keep their homes. For borrowers who are behind in their mortgage and unable to retain their homes there are a number of options that can help them avoid foreclosure.
A Short sale, a deed-in-lieu of foreclosure, and an assumption are programs by which a mortgage holder is freed from their property obligation and ownership rights with no foreclosure records. These programs are considered “not paid as agreed” and may still negatively impact credit rating but not nearly as much as defaulting.
Selling a home for an amount less then the outstanding balance due on the mortgage is known as a short sale. Short sales can be a quick way for struggling homeowners to rid themselves of mortgage debt.
Successfully using a short sale will be determined by the specific details of the mortgage agreement, local real estate prices and forecasts, and payment history. Mortgage companies may accept the proceeds from a short sell if their prospects for receiving more value for the home following foreclosure are not good.
Deed in lieu of foreclosure is one of the quickest and cleanest methods for avoiding foreclosure. This method does not even require selling the home at all, instead the bank takes control of the property deed and in return cancels the borrower’s mortgage debt. The end result is that the mortgage company owns the property outright and the borrower is left with nothing, similar to foreclosure but with less cost and aggravation.
Assumption is an option that involves a suitable buyer making your mortgage payments and mortgage contract in exchange for the rights to your property. Basically you vacate your home and the assumptor takes your place or you may have the option to stay in your home by paying monthly rent.
If you are a distressed mortgage holder looking for a way to prevent foreclosure there are programs for you, find foreclosure help including loan modification, loan refi, or deed in lieu of foreclosure
