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Options Available to Aviod a Foreclosure

We have identified 8 available options to avoid a foreclosure. Here are the +’s and -‘s.


1. Mortgage Modification – The reduction of either the interest rate on the loan, the principal balance of the loan, the term of the loan, or all of the aforementioned.

+ Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan.

–  Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

– Homeowner credit score may be decreased by as much as 100 points.


2. Rent The Property – If you have a mortgage payment low enough that market rent will allow it to be paid, you can convert your property to a rental and use the rental income to pay the mortgage.

Call Ian Sebastian at Studio City Short Sale today to find out what the market rate is. 818-267-7375.

+ Allows you to keep your property indefinitely.

The issues that can arise with a rental property are many and rents may not cover the full cost of property ownership and maintenance.


3. Deed In Lieu of Foreclosure – Also known as a  ‘friendly foreclosure’ , a deed in lieu allows you to return the property to the lender rather than go through the foreclosure process. Deed in Lieu requires Lender approval
and requires you to vacate the property.

+ Many times in a successful Deed in Lieu the Lender will forego their right to a deficiency judgment.

– Requires you to vacate the property and may be reported to credit bureaus as a foreclosure.


4. Bankruptcy – Bankruptcy has been marketed by many as a ‘foreclosure solution’, which in some states and situations it can be. Make sure to contact your attorney to review your options first. If you have non-mortgage debts whose payments are causing you to fall short of paying your mortgage payments, a personal bankruptcy will eliminate these debts and may be a viable solution.

+ Many times in a Bankruptcy the Lender will forego their right to a deficiency judgment.

– Requires you to vacate the property and may be reported to credit bureaus as a foreclosure.


5. Refinance – If you have sufficient equity in your property and your credit is still in good standing, you may be able to refinance your mortgage. If you need a referral to a qualified Lender, Call Ian Sebastian 818-267-7375

+ In some cases payments will be lower.

– In today’s market a refinance will most likely raise your mortgage payment and is an expensive process.

6. Service Members Civil Relief Act (Military Personnel Only) – If a member of the military is experiencing financial distress due to deployment and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Service Members Civil Relief Act. The American Bar Association has a network of attorneys that will work with Service members in relation to qualifying for this relief.

+ If qualified, will lower payments on all consumer debt in addition to mortgage payments.

– Must be active military to qualify.

7. Sell The Property – If you have sufficient equity in your property, you can list the property with Ian Sebastian with Running Realty.

+ Allows the homeowner to avoid foreclosure and harvest some of their equity.

– In many cases today, homeowners do not have sufficient equity to sell their property without negotiating a short sale (see next solution).

8 SHORT SALE – If you owe more on your property than it is currently worth, then you can hire Ian Sebastian with Studio City Short Sale to market and sell your property through the negotiation of a short sale with your lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: payment increase,  job loss, divorce, excessive debt, forced or unplanned relocation, and more.

+ Many times in a successful Short Sale, the Lender will forego their  right to a deficiency judgment.

– Requires you to vacate the property and may be reported to credit bureaus as a foreclosure.

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