Alternatives to Foreclosure in New York City
If you or someone you love has fallen behind on your mortgage payments and foreclosure seems like foregone conclusion, you are not alone and options you may have options you haven’t considered.
For example:
1. Renting your home. This may not cover all your costs, such as maintenance and housing, but the income you earn may help you get back on your feet and catch up with your payments while you downsize. The best part is you get to keep your home.
2. Loan Modification. Instead of foreclosure why not modify? This involves renegotiating the terms of your loan by extending the period in which you have to pay it back or by splitting up the delinquent payment over future months. Loan modification will only be approved if you submit documents to the bank indicating your ability to honor payments.
3. Short Sale. A short sale means the bank has allowed you to sell your home for less than the amount you still have to pay towards your loan. While this will have a damaging effect on your credit the impact is not as long-term as in a case of foreclosure in New York City. A short sale also requires bank approval.
4. Deed-in-lieu of foreclosure. This is when you willingly hand over the deed of your house to your lender, saving them thousands of dollars in the legal costs involved in foreclosure. Fannie Mae’s new regulations for deed-in-lieu situations states that a mandatory waiting period for acquiring a new loan is 4 years instead of 7 years after foreclosure. This option is not possible if you have more than one mortgage.
5. Payment Plan or Forbearance. If you are able to provide evidence of your financial hardship and the reasons behind it, your bank may agree to defer your mortgage payments for a certain number of months in order to allow you to save money, find a new/better job or improve your personal budget so that you can resume making payments.
For more information about any of these alternatives to foreclosure, please inquire about our free consultation.