I read an article by Betty Shute about the Foreclosure Alternatives and Iwould like to share some of that information with you.  Sometimes when homeowners feel their only way out is a foreclosure, they just don’t have enough information.  If you are in financial crisis, call your Realtor.  I am happy to help my clients.  Next, call your  Mortgage Company to see what you can do to keep your home or avoid foreclosure.  If you have received a Notice of Election and Demand for Sale, this signifies the beginning of the foreclosure process.  Betty recommends you first consult with your Lender, an Attorney, and Financial Advisor or Accountant to discuss your specific situation.  Everyone will need to work together to determine:

Solvency –  Does your monthly income exceed your monthly expenses?  Do you have some savings or assets?  Are you over extended?  Do your montly expenses exceed monthly income with no savings or assets?  If the home is worth more than what is owed on the loan, that is good news. 

Equity-  Do you have any equity in you property and if so, how much?  You want to owe less on the house than what it is worth.

Your Options:

Sale – Sell the property, pay off the lender, you may or may not get money back.  You may or may not have to bring money to closing.

Refinance – Replace loan in foreclosure with new financing, this may require cash to close.

Loan Modification – This is a voluntary adjustment of the terms of a loan by the lender to enable the homeowner to continue making payments; may include repayment plan for missed payments.

Short Sale – Sale transaction in which lien holders agree to accept lesss than full amount owed to release their liens against the property.

Deed in Lieu – Process whereby lender agrees to take back title to property by way of voluntary transfer of title/deed to avoid the foreclosure process.

Bankruptcy – Seek discharge of potential deficiency and other unsecured debts through Chapter 7 or Chapter 13, depending on qualification.

You can read Betty Shute’s full article in the Hosuton Real Estate Executive March 2009 edition.  I have shorted and changed the article for my clients, but replicated many of her clear cut points that I feel will be beneficial to you.  Please call me if you are a homeowner in financial trouble and I will be happy to help you with your situation.  Many homeowners can avoid foreclosure – know your options!