Homeowners who have been able to take advantage of foreclosure alternative programs, like short sales or deed in lieu of foreclosure plans, have often been concerned that there servicer may require them to meet costs even after they have lost their home. In the past, homeowners who, for instance, completed a short sale had been surprised when their lender contacted them about money still owed on a mortgage for fees and penalties which a servicer feels they may owe.
Understandably, homeowners who become unable to meet their monthly mortgage payment obligation are in a difficult position and, for many, avoiding foreclosure is their main focus. While there have been some homeowners who have simply walked away from their home, these alternative plans were offered as a way to assist homeowners by allowing them to avoid a formal foreclosure on their home if they participated in a short sale or simply surrendered the deed to their home.
Yet, again, concerns over remaining financial obligations have worried some homeowners who wonder whether they will be forgiven the remaining balance on their home if they participate in a foreclosure alternative program. According to the Making Home Affordable Program website, homeowners who are approved for either a short sale or deed in lieu of foreclosure program will, as a result, have met the full satisfaction of the total amount due on their home.
The short sale program states that homeowners who sell their property, meaning they qualify for a foreclosure alternative short sale, will be in a position where the servicer accepts this as full payment on their home. Similarly, homeowners who surrendered the deed to their home are not required to meet additional payments after they have vacated their property, which again, was a problem for some homeowners in the past.
Homeowners obviously want to avoid the loss of their home at all costs, but in situations where foreclosure may be inevitable, advisers often suggest that homeowners speak with their servicer about these alternative programs, as avoiding a formal foreclosure may be more beneficial to a homeowner’s credit history and may allow them to get back on their feet financially sooner rather than later.