Foreclosure alternative plans have been an option for some homeowners who were having particular troubles within their mortgage and may have been unable to qualify for mortgage foreclosure prevention plans, like a home loan modification or traditional refinancing. These foreclosure alternatives have offered homeowners the opportunity to participate in either a deed in lieu of foreclosure plan or a short sale on their home, either of which would be seen as full payment if a homeowner successfully completed the alternative program.
Obviously, foreclosure prevention is often a homeowner’s first goal when seeking assistance on their home, but some instances have arisen where homeowners either did not qualify for a modification or refinancing opportunities to lower their mortgage payment obligation. As a result, some of these individuals were able to either surrender the deed to their home or find a buyer for their underwater mortgage, and escaped a formal foreclosure.
Yet, there are some banks which have been hesitant to offer these foreclosure alternatives on a wide scale, despite the fact that major mortgage servicers participating in the Making Home Affordable Program all do have options where homeowners may use an alternative to foreclosure plan. However, for a homeowner to qualify for one of these foreclosure alternatives, certain conditions are usually required as there have been some individuals who have attempted to take advantage of these options where a homeowner may be able to be alleviated of their mortgage burden.
Typically, the homeowners have to show financial distress in their life which has prevented them from making their mortgage payment, where they were previously easily able to do so. Again, many of the short sale and deed in lieu of foreclosure plans are only offered to homeowners who are not able to qualify for a mortgage modification or another form of foreclosure prevention. While short sales, which have been usually reserved for underwater mortgages, may be used by some homeowners, finding a buyer and getting a servicer to agree to the sale have been hurdles for some homeowners, but has been an option that has aided many others.
Obviously, financial institutions are not letting homeowners simply surrender the deed to their home through deed in lieu of foreclosure plans, but again, there are requirements for homeowners before they may use this option as well. However, homeowners who may be considering a deed in lieu of foreclosure plan or a short sale had been prompted to speak with their servicer about foreclosure prevention efforts or possible refinancing opportunities. Understandably, many homeowners who have not been offered these foreclosure prevention efforts are those seeking foreclosure alternative plans, but exploring all of one’s options for keeping a home is one that that has been advised before seeking out a plan which will either allow for a short sale or for a homeowner to surrender the deed to their home and avoid a formal foreclosure.