Loan Modification

Loan modification

This involves permanently changing the terms of your mortgage note so that they are more affordable for you. This could be in the form of a principal reduction, lower interest rates, wrapping your delinquent payments to the back of the loan, fixing your rate, or all of the above. This currently is the best option for most homeowners.

Forbearance Agreements

Forbearance is themost common method to reduce loss after the foreclosure proceedings have started. Allows you to lower payments or detain them until you can bring yourself current. This momentarily stops the foreclosure from moving forward.

Short Sale

This is usually the last option for most borrowers. If all other options have been exhaused, then the bank can agree to sell the home for less than the loan balance. The bank will usually only agree to this if they feel that it will cost them less than going through the whole foreclosure process. This benefits you because it will not show up as a foreclosure on your credit report.

Foreclosure Bail Out Loan

A foreclosure bailout loan are usually only offered by hard money companies. "private money" They are not based on normal loan criteria such as credit or income. The criteria is mainly based on loan to value.

With most foreclosure bailout programs, your loan to value has to be below 65%. If your home is in a declining market it could even be lower. This means that if your house is worth $1,000,000, that you could qualify if your total mortgage balance was less than $650,000.

Foreclosure bailout loans are also very expensive. In almost every case the hard money lender will charge you the state maximum allowed for interest rate and points.

Lease Buy Back Loans

A lease buy back is where you sign over your home to another party and they allow you to stay in the home without making payments for a set period of time.

This is accomplished by taking the payments and points out of your equity when you sign the home over. Both parties sign a legally binding contract that enables you to buy the home back for a set price at the end of the term. The set price is the original loan balance + interest accrued throughout the term + points.

The reason that this can potentially be beneficial is that the borrower is not making any payments for the term.This enables them to repair the problems that prevented them from refinancing in the first place.

While there are legitimate companies that provide lease buy backs, there are twice as many companies that use unscrupulous tactics. In any case it is a very expensive way to stop foreclosure.