Foreclosure Heartbreaking Agony

The advice given is to contact the lender early. But that will not always stop the foreclosure process and subsequent agony of a broken heart. Borrowers are more often than not in such a pitfall that no straw is strong enough to pull them out. They just cannot afford to keep their houses.

For them there are two options – a short sale or a deed-in-lieu-of foreclosure. In either case the house will have to be relinquished. In a short sale the house is sold for an amount, which is less than the amount due to the lender. The latter agrees to write off the balance. In a deed-in-lieu-of-foreclosure the house owner or borrower agrees to transfer the title of the property to the mortgage firm for cancellation of the total debt. Before taking these two extreme steps the owner should avail of a 90 days respite to sell off the unit at the current market rate.

It is being repeatedly stressed by counselors that the mortgage should not be allowed to reach the point of agreeing to the two aforesaid options of short sale or trust deed sale. The lender should be contacted immediately as soon as the warning lights begin to blink. It is a mistaken conception to think that by doing so foreclosure will be hastened. Lenders are far from keen about taking on the headache of a time consuming expensive foreclosure process. They would rather have the owner continue to stay in the house and make regular payments. Real estate rates are nose-diving making it difficult to sell properties without incurring a loss. A senior spokesperson of one of the largest mortgage firms, Freddie Mac, says that they want to work with the borrowers without wasting time. To bring it into effect the firm has launched an early-intervention programme together with counseling agencies in San Francisco and Atlanta.

Time is of vital importance. If you are late by 30 days then the problem is concerned with only a single installment. But delay will widen the gap making it more difficult to bridge it. Then the only options seem to be short sale or deed-trust sale. Lenders prefer the short sale to dragging the borrower to court. At least the name of the latter is saved. However there is another negative side for the borrower. Money saved on the loan is considered as taxable income!

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