Caution: There’s no strategy in ruining your credit
Walking away from your mortgage can be incredibly dangerous
when considering your financial future.
In a “strategic default,” homeowners simply choose to walk
away from their mortgages—in other words, move out and
stop paying. This is often done when a homeowner owes more
on the home than it’s worth or is “underwater.” Most of these
homeowners do not understand that walking away will expose
them to foreclosure, which carries credit issues, current and
future employment challenges, issues with security clearance,
and possible debt collections.
Due to current economic conditions, one in four American
homeowners have found themselves underwater on their
mortgages, and millions can no longer afford to make their
Fortunately, you have options to avoid foreclosure and protect
your financial future.
Solutions for Financial Stability
Generally considered one of the most viable alternatives to
foreclosure, short sales allow homeowners to minimize financial
damage and move on from a burdensome, unaffordable
mortgage. In many cases, short sales allow borrowers to qualify
for a new mortgage in as little as two years, as opposed to five
years or more after a foreclosure.
Demystifying Short Sales
There are many myths about how short sales work, including
the rumors that they have the same affect on your credit as
foreclosure and are impossible to complete. I can show you
how that’s just not true, and how securing a loan for a home
in the future is much quicker after a short sale rather than a
foreclosure. New bank and government short sale programs
have also made the short sale process a more streamlined,
efficient process for all parties to the transaction.
Benefits of Short Sales
• Avoid foreclosure at no cost to you
• Lesser impact on credit scores
• Security clearance protection
• No challenges to future employment
• Retain some control over the sale of your property
(vs. public auction)
• The ability to negotiate away a deficiency judgment
(collection of your mortgage debt)
• Shorter waiting periods to get another mortgage
Other Alternatives to Foreclosure
A reinstatement is the simplest solution for a foreclosure, but
often the most difficult to achieve. The homeowner simply pays
the total amount past due (including late fees) to the lender.
A mortgage modification involves the reduction of one of the
following: the interest rate on the loan, the principal balance of
the loan, the term of the loan, or any combination of these.
Also known as a “friendly foreclosure,” a deed-in-lieu allows
the homeowner to return the property to the lender rather
than go through the foreclosure process.
A forbearance or repayment plan involves the homeowner
negotiating with the mortgage company to allow them to
repay back-payments over a period of time.
Rent the Property
This option does not require lender approval, but does require
the homeowner’s ability to rent the house for enough money
to cover the monthly mortgage payment.
Servicemembers Civil Relief Act
If a member of the military experiences financial distress
due to deployment—and their debt was entered into prior
to deployment—he or she may qualify for relief under the
Servicemembers Civil Relief Act.
Many believe bankruptcy is a “foreclosure solution,” but
this is only true in some states and situations. Entering
bankruptcy can be a risky and costly process. Be sure to seek
the advice of a qualified bankruptcy attorney when pursuing
this as an option.
Refinancing means you will acquire a new loan based on your
current credit standing. If you have already missed mortgage
payments, your credit score may make it difficult to find a
loan with cheaper payments.
Knowing that foreclosure can be avoided gives you the ability
to develop a realistic strategy to plan for a future that is both
financially stable and full of hope.
The Government and Lenders Want to Help
Since the beginning of the mortgage crisis, millions of
Americans have faced mortgage challenges. For the last four
years, lenders have faced an equally daunting challenge of a
managing the sheer number of borrowers who weren’t able
to pay their mortgages. Lenders are not in the business of
owning real estate, and are motivated to find solutions that
would benefit all parties involved. In a short sale, even though
lenders lose a part of their investment, they recover more
funds than in a foreclosure. Homeowners are also able to
keep foreclosure off their credit reports.
Today, lenders are becoming increasingly equipped to
streamline the short sale process, and have developed new
processes to help facilitate this foreclosure solution.
In addition, the government’s Home Affordable Foreclosure
Alternatives (HAFA) program offers cash incentives to lenders
and homeowners to successfully complete a short sale or
The program requires the waiver of a deficiency
judgment, meaning the lender must forgo its right to pursue
any losses they incur from the short sale.
Give the Green Light to Financial Stability
When you have options to avoid foreclosure, you will soon
realize that there’s nothing strategic about “strategic default,”
or walking away. I can help you form a real strategy based
on your circumstances, and help put you back on the road to
financial stability. The sooner you call me, the more time we’ll
have to act and move toward a more promising future.