For borrowers who have been served a Notice of Default on their mortgage loan, few things are more important than understanding the options available to them. Defending the action is not the only solution. There are also alternative options that homeowners can explore with a West Palm Beach foreclosure defense attorney.
Here are the five potential alternatives to foreclosures in Florida.
In terms of legal proceedings, the simplest solution to a foreclosure notice is to reinstate the mortgage. Florida homeowners have the power to bring the loan current at any time. However, anything less than the full amount owed (including interest, late fees, and attorney fees) is unlikely to be accepted by the lender. Therefore, struggling debtors may not find it so simple to produce the funds needed to bring the foreclosure to a halt.
Another option is to have the loan refinanced. If one is struggling financially but has maintained good credit up until this point, they may qualify to have the loan refinanced with more favorable, more manageable terms. However, since foreclosure typically follows a series of missed payments that stem beyond one’s mortgage, this is not an option available to many borrowers
3. Loan Modification
A more likely fit for a struggling borrower is a loan modification. Whereas refinancing can allow the borrower to receive more favorable terms and a shorter repayment period, a loan modification often involves committing to a longer repayment schedule with smaller payments that help the debtor get back on his or her feet. However, getting approved for a loan modification is not an easy feat, as the process is lengthy and notoriously complicated. In addition, the lender can even continue pursuing foreclosure after promising a borrower approval is pending. Therefore, guidance from an attorney who specializes in loan modification is always advisable.
4. Short Sale
While the aforementioned options are made for homeowners looking to keep their homes and get back on track with mortgage payments, other debtors may find it best to part ways with the property. When that is the case, a short sale can be an excellent way to cut one’s financial losses and avoid the more severe repercussions associated with foreclosure. A short sale involves an agreement between the lender and delinquent borrower to sell the home for less than the mortgage’s remaining balance. The debtor would then be free of his or her obligation to repay the remainder, while the bank would have the benefit of avoiding costly foreclosure litigation. Before agreeing to a short sale, it is important that borrowers consult with an attorney to ensure the contract will effectively rid them of their debts, as sometimes a waiver of deficiency is needed to keep other fees from arising after the sale is made final.
5. Deed in Lieu
Another option for borrowers who are ready to part ways with their home is a deed in lieu of foreclosure. This involves surrendering the home to the lender and receiving an estoppel affidavit in return that rids one of his or her obligation to repay the remaining balance. This is typically a last resort for lenders, as they often take a loss in the exchange. However, having an experienced foreclosure defense attorney negotiating on one’s behalf can greatly increase the odds of approval.
6. Chapter 13 Bankruptcy
For borrowers who want to keep their home, but they cannot reinstate in full, a borrower can file a Chapter 13 bankruptcy which would allow them to repay the reinstatement amount over time. The downfall with this option is that the debtor must pay the regular payment plus the arrears payment each month, which can become costly if the reinstatement amount is large.
Looking to learn more about your options for fighting foreclosure? Contact a West Palm Beach foreclosure defense attorney at Kelley and Fulton today to get customized legal guidance. Together, we can work toward a favorable outcome.