Commonly Asked Questions About Foreclosure Defense
Though every situation is unique, our clients share many common worries and concerns. Our experienced team provides answers to our most frequently asked questions to provide peace of mind and confidence to move forward with your legal case.
- Page 1
What is best? Foreclosure, Short Sale or Deed in Lieu?
Among short sales, foreclosures, and a deed in lieu, which one can be the most damaging to your credit score? Your credit scores can affect nearly every aspect of your adult life. Many people have common questions such as, “what is better, foreclosure or short short sale?” This blog will answer some of these important questions.
Unfortunately, a nearly uncountable amount of homeowners face hard times, and the decision to turn over their home can be a difficult, but necessary measure. These homeowners will more than likely be concerned with the effects of foreclosure and how it can affect their credit score.
Know Your Options!
If you are considering pursuing a foreclosure, short sale, or deed in lieu, you should know you options. This blog will answer some common questions that homeowners need to know about. Each option has pros and cons, but the best way to guarantee you are making the right choice is to talk to an experienced foreclosure defense lawyer.
Foreclosure, Short Sale and Deed in Lieu – Frequently Asked Questions
What options are available when a homeowner can no longer make their payments?
Individuals could simply choose to let their home go into foreclosure—decreasing their credit score and their ability to get a loan, for at least seven years. Homeowners unable to make their mortgage may also decide to go with a deed in lieu of foreclosure. Through a deed in lieu, an individual will hand over their property to the mortgagee in return for the dissolution of the mortgage. However, this can also leave a smear on your credit history.
Is a short sale less more harmful than a foreclosure or a deed in lieu?
The general public has been convinced that a foreclosure is shattering to a credit scores, and that any other option is more assuredly better. This is not always true. Talking with a qualified foreclosure defense lawyer can help you understand the difference between short sale and deed in lieu of foreclosure.
What does short sale, foreclosure, or deed in lieu can really do to your credit score..
In regards to a short sale, there may be some lenders who lean more positively towards a short sale over a foreclosure, still, your credit score is affected equally. The credit scoring system does not differentiate between the foreclosure, short sale or deed in lieu. Before your make a decision, read more about short sale negotiation or the benefits of a deed in lieu of foreclosure. But remember, talking with a qualified foreclosure defense lawyer can help you understand the difference between short sale and deed in lieu of foreclosure.
The higher your score, the further you fall.
Many people wonder, what is the score impact of a mortgage delinquency, foreclosure, short sale, or a deed in lieu. A tool called a “FICO Analysis” is used to answer this question. The FICO analysis shows, that individuals having higher credit scores may face a more significant drop and that it takes much longer for the credit score to recuperate to the once higher level; assuming all other credit remains in good standing.
What is Loan Modification?
Some people may be able to pursue a loan modification or, restructure what they have to pay each month. This is called loan modification or “repayment plan negotiation”. To learn more about how Tucker, Nong and Associates can help you pursue a repayment plan/loan negotiation, visit our useful page:
Contact us to Learn More!
Making a decision on how to handle a mortgage is difficult and complicated. The team at Tucker, Nong and Associates are here to help you. Contact us online or give us a call to learn more about how we can help you, call us today or contact us online.
What is a Loan Modification?
A loan modification is an adjustment to the original terms agreed upon by the lender and the borrower, there are three areas that can be adjusted, they are: Interest rates, principal owed and length of the loan. The outstanding principal owed is the one area a lender is least likely to want to modify, but in some cases they must negotiate this area with the borrower to make a modification work.
Reason 1 – The Homeowner Can’t Make The Payments
The most common reason a lender will consider modifying a mortgage is because the homeowner can no longer make their payments. There are a variety of reasons for this, the homeowner lost their job, a divorce, adjustable mortgages, the homeowner took out a equity line of credit which they can’t repay, illness, these are some of the common ones.
In these cases the lender, once the homeowner proves their situation is in bad shape, will consider a loan modification. It costs the lender a lot of money to foreclose on a property, so keeping the homeowner in the house is more cost effective in many cases. Since each situation is different you cannot pin down one type of modification, if the homeowner just needs time to catch up, then deferring payments for a period of time and attaching them to the back end of the loan could be the right modification for that person. Someone else may need a reduction in interest rates or even forgiveness of some of their principal owed, it goes on a case by case basis.
Reason 2 – The Lender Doesn’t Have The Proper Paperwork
During the recent housing mortgage debacle you see lenders offering homeowners incentives to remortgage their home at more favorable terms for basically no reason. If we go back several years and discover these loans being sold, resold, repackaged and so on, you can see how the paperwork can get lost, this prompts the lender to make these offers in exchange for new contracts.
In these cases a loan modification is done, but for very different reasons, the homeowner actually benefits from this type of modification.
One final note – You now see lenders offering cash incentives to homeowners that cannot make their payments, these cash incentives are so they will leave the property in good shape and within a certain time frame. I guess you can consider this a buyout loan modification.
So, as you can see loan modifications take place for a variety of reasons and there are many combination’s a lender can use to help out the homeowner, it just depends on the willingness of the lender and the borrower to come to an agreement. Since these can be highly emotional times, hiring a loan modification professional might not be a bad idea in these situations.