The housing market and recession has caused much stress, strife and heartache for many Sedona & Verde Valley families. Foreclosure is a devastating financial blow and one that many times can be avoided. The options available to Sedona & Verde Valley residents to avoid foreclosure are many. Please see below for a list of Northern Arizona HUD approved housing counselors.
A reinstatement is the simplest solution, however, often the most difficult. The homeowner simply pays the total amount owed to date. A lender will 'reinstate' a mortgage up to the day before the final foreclosure sale.
•Benefit: Does not require the mortgage company or lender's approval.
•Drawback: Requires that a homeowner is able to pay it. Statistics show that one a homeowner is two months behind, there is an 80% chance the home will eventually foreclose.
Forbearance (Repayment Plan)
A forbearance is when the homeowner negotiating with the mortgage company to allow them to repay back payments over time. Typically the borrower will make their current mortgage payment in addition to a portion of the back payments.
•Benefit: Allows you to keep your home and make up back payments comfortably.
•Drawback: Requires a homeowner to make larger payments and most mortgage companies will require you to qualify.
Modifications involve a reduction of one of the following items: the interest rate, the balance due, or an increase in the term of the loan (30 year mortgage converts to a 40 year), or possiblya combination of one or more ot these items.
•Benefit: Reduces monthly payments and possibly may reduce the balance due
•Drawback: Requires qualification for the new payment, requires documentation and a fair amount of persistence and patience. Lender must use modifications as part of their loss mitigation strategies.
Rent the Property
•Benefit: You keep the home and your tenant pays for it!
•Drawback: Managing rental property can be a real headache. Also, area rental amounts may not be sufficient to cover the entire payment.
Deed in Lieu of Foreclosure
The homeowner simply deeds the property back to the bank, however the lender must accept your deed in lieu.
•Benefit: The lender is likely to waive claims to any potential deficiency judgments.
•Drawback: Could be reported as a foreclosure on your credit.
This could be helpful, if you have other debts in addition to your home. Also, filing bankruptcy will stave off foreclosure proceedings.
•Benefit: Stalls foreclosure proceedings and you dont need any assistance from your lender.
•Drawback: A bankruptcy will generally only stall—not stop- a foreclosure.
If you actually have equity, and your credit is good, you MIGHT be able to refinance. But in the current environment, we have heard of people with credit scores over 800 hundred, getting turned down.
•Benefit: Might lower your interest rate and payment significantly.
•Drawback: In today's environment, refinancing is an expensive and slow moving process.
Servicemembers Civil Relief Act (military personnel only)
If you or your spouse are military and are financially distressed due to your deployment, and the debt was accrued prior to deployment, relief under the Servicemembers Civil Relief Act may help. See The American Bar Association for attorneys who work with servicemembers qualifying for relief.
•Benefit: Payments could be lowered on all consumer debt, including the mortgage.
•Drawback: Must be active military member.
Sell the Property
If you have some equity, you may still be able to sell under traditional circumstances.
•Benefit: Avoid foreclosure and possibly receive some proceeds from the sale.
•Drawback: Unfortunately, many Northern Arizona homeowners are upside down, and wouldn't be able to sell without negotiating a short sale with their lender. (see next solution).
If your upside-down or underwater, (owe more than it's currently worth), then consider a short sale with your lender, if you have had a financial hardship between the date of the home purchase and the date you begin the short sale process. Acceptable hardships examples might be: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, health reasons, death in the family or failure of a business.
•Benefit: Salvage some of your credit rating, and potentially avoid a deficiency judgment. You may qualify for another mortgage in as little as one year ( five years for a foreclosure).
•Drawback: Short sales can be a very exasperating process for the seller and the buyer. You will need to find an agent who is VERY well versed in thes extremely complicated transactions.
This is a simple summary of solutions available to those who may be facing foreclosure. Please call or email today for a free confidential evaluation of your situation, property, and options. Below are links to information on government programs and HUD approved housing counselors in Northern Arizona.
Foreclosure Prevention – Information and Resources
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Below are links to Local Northern Arizona HUD approved housing counselors who can help you navigate your options and assist with your mortgage modification.
|2304 N. Third Street
FLAGSTAFF, Arizona 86004-3605
|MONEY MANAGEMENT INTERNATIONAL, INC. FLAGSTAFF, AZ
|2615 N 4th St Ste 2
FLAGSTAFF, Arizona 86004-1812
|NORTHERN ARIZONA COUNCIL OF GOVERNMENTS
|119 East Aspen Avenue
FLAGSTAFF, Arizona 86001-5222