Homeowners who are having difficulty meeting their monthly mortgage payments have turned to foreclosure prevention plans, like home loan modifications, in the hopes of finding a more affordable mortgage payment solution during a difficult financial time. However, there are homeowners who have attempted to save their home but were unable to do so and are now facing foreclosure.
Yet, foreclosure alternative programs like the Home Affordable Foreclosure Alternative initiative, which is an extension of the Making Home Affordable Program may help homeowners who cannot afford to keep their home by allowing them to avoid the foreclosure process. It’s hoped that homeowners who are able to take advantage of these foreclosure alternative plans will be able to rebuild their personal financial life in a timelier manner and enter into the world of homeownership sooner, when there financial life stabilizes.
Options like short sales and deed in lieu of foreclosure programs have assisted many delinquent homeowners who face defaulting on their home loan or may be in danger of foreclosure. Underwater homeowners may be able to arrange a short sale of their property for less than the full amount that is due on their home loan. Homeowners who qualify for the short sale program will be able to work out an agreement with their mortgage servicer in which the bank will accept the payoff of a short sale as full satisfaction for their mortgage obligation.
Also, deed in lieu of foreclosure programs may help homeowners who are willing to voluntarily transfer the ownership of their property to their mortgage servicer, which again, would be seen as a satisfaction for the total amount due on their home. These options are set in place to help homeowners who cannot afford their home loan payment, did not qualify for a modification or haven’t successfully completed a modification trial period.
Foreclosure alternative plans are beneficial to homeowners who qualify simply because some financial institutions have allowed short sales or homeowners to surrender their deed but have sought to gain the remaining balance a homeowner owes. Understandably, if a homeowner is still paying money towards a mortgage they want to be living in their home, but in cases where homeowners are distressed in their personal financial life, these foreclosure alternative plans can allow homeowners to avoid the scar on their credit score that comes with foreclosure, can avoid the obligation of paying the remainder of their home loan in some cases, and may be in a situation where they can enter the housing market in a shorter period of time than had they faced foreclosure.