Home loan foreclosures have been a problem for numerous individuals across the nation, but there have been programs that have offered benefits from either underwater short sales or deed in lieu of foreclosure plans that can offer these homeowners the option of avoiding a formal foreclosure process despite the fact that they are unable to continue paying on their home. Many homeowners may still be unaware that these options are available, and as a result, plans from the Making Home Affordable Program and various financial institutions that service these home loans have been publicized so that homeowners who have attempted to avoid the loss of their home but are simply in a great deal of financial distress can benefit from these foreclosure alternative options.
A short sale for an underwater homeowners essentially allows for the sale of a distressed property in situations where a homeowner’s negative equity predicament has either made refinancing to a more affordable rate impossible or, if other factors are in place, homeowners may not qualify for a modification on their home loan. Typically, homeowners who have lost their job or have seen a drastic drop in their monthly income are those who may qualify for a short sale when negative equity has made affordability on their home almost impossible and, again, other options have been exhausted as a result.
However, there are homeowners who may not be in a negative equity situation or may have unsuccessfully tried to short sell their home that may have the option of avoiding a formal foreclosure process through a deed in lieu of foreclosure plan. While similar programs like the cash for keys initiative have brought about similar benefits, homeowners who are able to surrender the deed to their home without facing foreclosure have found that they are in a better financial position later as a result of doing so. Obviously, foreclosure can be a massive setback in the life of almost any homeowner, so those who have unsuccessfully applied for a modification, have attempted to sell their home at a loss or simply sell their home because they can no longer afford their mortgage payments, these deed in lieu of foreclosure options have been greatly beneficial in helping homeowners who have had any track record of being able to make the mortgage payment until a particular troubling situation arose in their financial life.
While short sale and deed in lieu of foreclosure programs can offer a way for distressed homeowners to escape foreclosure and relocate from their home, this is obviously not the first option many homeowners seek as avoiding foreclosure and the loss of their home is typically the primary goal of many distressed homeowners. Yet, servicers do require that these individuals seek out modification assistance first, which can prevent the need for either of these foreclosure alternative programs, but if foreclosure prevention is not available, these alternatives to foreclosure can not only be helpful in terms of homeowners doing less damage to their credit, but relocation assistance is usually available to homeowners as well as relocating to a new living arrangement could be particularly difficult for those experiencing financial trouble.