Q: What are my options to foreclosure?

A:

1.Forbearance: This is a TRIAL period repayment process where the bank allows you to pay them a monthly fee and they MAY give you a loan modification.  This is usually granted in a hardship situation and they usually require you to provide information that you meet their requirements.  I almost universally advise people to not pay on a trial basis as they seem to not lead to a loan modification most of the time.  Of course each situation is unique and you should consult a professional with questions about your specific situation. Beware that banks will sometimes call a forbearance agreement a loan modification even though it is not.

2. Loan Modification: This is normally recommended if the bank is willing to reduce the amount of principle that the homeowner owes.  There is little to no relief to the homeowner if the bank reduces the interest rate and not the principal.  Each situation is unique, but normally by just reducing the interest rate the payments are not reduced very dramatically.

3. Short Sale: A short sale is where a realtor will sell your property and in return the bank will accept a lower amount than what you owe.  Be careful of tax consequences and owing a deficiency (difference between what you owe and the amount it is sold for). You cannot rely on verbal communications and always have an independent attorney review any documents before you sign anything.

4. Deed in lieu of foreclosure: This is where the home owner voluntarily gives back the home in return to not be liable for the deficiency. There can be tax consequences for this action and you do have to give your home away.

Many people think the bank has all the power to take their home and they may feel hopeless or powerless.  At Myers & Eichelberger, we try to empower the home to not just give their house away.  There are many options to a foreclosure and each situation is different. Your situation may warrant a different response than someone else. We believe everyone should know their rights and we can discuss these rights with you at no cost.