Overcoming Payment Challenges
Is paying your mortgage becoming more difficult?
Your lender may have a solution to help you. Most understand that homeowners are facing difficulties making their monthly mortgage payment. With a full suite of options available, we explore your solutions and comprehensively report which apply.
 What are my options?
 Your options vary depending on your particular circumstances. Generally speaking, the options include  see MATRIX :
RETENTION
Solutions to keep you in your home:
Debt reduction / LIQUIDATION SOLUTIONS:
Each option is impacted significantly by the homeowner's / borrower's loan documentation and the commitments made to the lender(s).
How will I know which is the best option for me?
This is a tremendously complicated question. The answer will depend upon your assets, liabilities, income, expenses and the underlying reason why the house is in foreclosure. The best solution will also depend upon the type of mortgage you have and where in the foreclosure process you are when you make the decision to save the house.
I conduct a 2-PHASE analysis
click here - ENGAGE ATTORNEY
- Phase 1 involves me with gaining a necessary baseline understanding of your file – this fee is fully earned and non-refundable. A fully earned flat fee is paid for a comprehensive analysis that establishes strategies aimed at helping you make informed decisions about 'what next'. This phase exposes the strengths and weaknesses of your situation so that we can approach solutions with clarity and understanding.
- Phase 2 involves me an exit strategy (i.e., loan modification or short sale) – those fees revolve on the type of representation provided and a refundable retainer is required if the property is short sold. For instance, in a short sale, my compensation comes from participating in a portion of the listing office commission which is approved to be paid by the lender/s.
Contact me to assess your particular situation.
It is in your best interest to Act NOW.
Time is working against you.
With my analysis, you will make a more informed decision about how to proceed.
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Lower Payment | Repayment Plan | Conditional Forbearance
In each of the following options, complete + submit data
ENGAGE ATTORNEY along with a FEE
Request a Lower Payment
If you are experiencing difficulty making your monthly mortgage payment, your lender may be able to help. Most lenders understand that situations change and there are uncontrollable events that can occur that can make your mortgage payment difficult to afford.
We are are available to consult with you and to negotiate on your behalf with your lender/s to make your mortgage more affordable.
The first step in the process is to determine if you are eligible for a refinance into a new mortgage at more favorable terms.
Repayment Plan
Short term financial difficulties can cause you to fall behind on your mortgage. A repayment plan can help you get caught up.
We all face short term situations in our lives that may cause financial set backs. Whether it’s unexpected medical bills or a period of unemployment, you may fall behind on your monthly obligations. A repayment plan is a short term solution that allows you to get caught up on your mortgage with payments you can afford.
The benefits of a repayment plan are:
- Delinquent amounts are repaid over a period of time, typically three to six months
- Paying the delinquent amount over multiple payments keeps your repayment plan payments low and affordable
- In just a few months your loan will be caught up and you will return to making just your monthly mortgage payment
Whether you call your lender or us, your loan will be review and you will be asked to provide current / updated financial information. Once all your information is updated your loan will be reviewed to determine if you qualify for a repayment plan. If approved, your monthly statement will include your mortgage payment, escrow payment if applicable and your new payment amount for the repayment plan.
Conditional Forbearance
Sometimes you need help making your mortgage payment. Conditional Forbearance may be the help you need.
When you have unexpected financial difficulties you may find it hard to continue making your monthly payments. With a conditional forbearance you can make lower payments for a limited time, typically three months. This allows you to keep your mortgage from going further delinquent while you resolve your financial situation.
The benefits of a conditional forbearance are:
- Reduced payments for a fixed time, typically 3 months
- Suspended foreclosure proceedings pending the completion of the forbearance plan
- After the set number of payments your loan will return to your regular payment schedule per the terms of your note
- If you have unpaid delinquent amounts you may need a repayment plan or loan modification upon completion of the forbearance plan
A conditional forbearance may be the right program for you if you:
- Have a short term financial difficulty that is or will soon be resolved
- Need a few months of lower payments after which you will be able to afford your full monthly payment
- Will be able to pay off your delinquent amounts upon completion of the forbearance plan or can qualify for a repayment plan at that time
To qualify for a conditional forbearance you will need to prove a financial hardship. If the lender is satisfied that you have a financial hardship great enough to keep you from being able to make your payment you may receive a conditional forbearance. You will be sent documents to sign that outline the terms of the forbearance. Upon completion your payments will return to your normal monthly payments and any delinquent amounts will be due.
Short Refi / Short Refinance / Mortgage Write Down
The refinancing of a mortgage by a lender for a borrower currently  in default on his/her payments. This is done to avoid foreclosure. Typically, the new loan amount is less than the existing outstanding loan amount and the difference is typically forgiven by the lender (NOTE: there will likely be 1099 ordinary income from debt relief - consult an attorney + CPA). Although many lenders currently reject these submittals, it might be approved because it is more cost effective than foreclosure proceedings.
Foreclosure is an expensive solution for a lender for loans in default; not only does the lender not receive any payments for up to a year, but it may lose out on fees associated with the procedure. A short refinance is just one of several alternatives that might be more cost effective for the lender. It also allows the borrower to keep his or her home.
Under unique circumstances, it MIGHT be possible to effectuate a short refinance IF there is just one loan encumbering the property. Where there are two loans, even if serviced by the same lender / servicer, the investors are different and unlikely to cooperate with a short refinance except, perhaps, where the loans are characterized as 'purchase money' - in California, those type loans are non-recourse. Consult an attorney.
A short refinance works in much the same way as a short sale only in the case of a short refinance the “offer” presented to the bank is actually a copy of the homeowner’s brand new short refinance FHA Secure approval. The short refinance approval, along with all the supporting documentation, is then submitted to the bank requesting a discount. Once the bank accepts the discount, they have accepted a short payoff and agreed to a discount on the loan allowing for the short refinance.
| Example: |
| Existing First Mortgage |
$400,000 |
| Current Property Value (FMV) |
$300,000 |
| New Loan Amount (FHA Backed) |
$291,000 |
| Closing Costs for New Loan (wrapped into loan) |
$5,000 |
| Existing Lender Approves Short Refinance |
$286,000 |
Deed-in-Lieu
Financial difficulties along with depressed housing values can cause challenging times. Some lenders understand your situation and would like to work with you in this situation.
This option is most common for homeowners in declining markets who are unable to sell their home via a short sale.
A Deed in Lieu (DIL) of foreclosure is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.
Before choosing this option, consider the following:
- The property must be free of any other liens in order for you to accept a deed-in-lieu solution
- Your credit report will indicate that your debt was "Settled for Less than the Full Balance Owed"
- This option may adversely affect your ability to obtain credit in the future
NOTE: Consult an attorney to address your specific situation.
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Paul E. Stansen, A Professional Corporation |T: 888.529.6632 | F: 818.332.4238
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