Distressed Property Blog

If you’re facing foreclosure or are in the tenuous stage of “pre-foreclosure,” now is the time to act. Avenues still exist that could suit you and your situation perfectly, and yes, you may be able to stay in your home. Or, as an investor, you can prevent a solid property from slipping into foreclosure and thereby gain a position that could pay off for both you and a distressed property owner.

When facing foreclosure, the seven literal keys to your kingdom are: Forbearance, Mortgage Modification, Bankruptcy, Reinstatement, Refinance, Redemption, and Lease Option. I already covered the first three–Forbearance, Mortgage Modification, and Bankruptcy–back on the 6th of March, so today I’ll cover the remaining four.

But before I do, I want to again stress the importance of knowing every last one of these foreclosure avoidance options because your day–to-day financial life, investment portfolio, and living situation can almost always be turned around using the techniques I discuss here on the Distressed Property Blog.

1. Reinstatement catches you up on past payments and any fees or penalties from the default when a lender has started foreclosure. As the homeowner, you pay back or “reinstate” everything owed. To see if reinstatement is possible, don’t wait for the bank call you. , Instead, get involved, answer calls, make those meetings with lien holders, and never ever become a puppet dancing on their strings. Ask about reinstatement today!
2. Refinance the property if you can, but keep in mind that you must have something like home equity, credit still intact, and income sufficient to cover your new, lower monthly payment. Be careful though to avoid getting scammed into a high cost mortgage just because you feel desperate. Remember: if you are unable to refinance with, the bank’s foreclosure rates go up, and that looks very bad on their balance sheet.
3. Redemption can be sweet because you have a period after foreclosure (six months to a year in some cases) to buy back your home, along with any qualified expenses you may have accrued. The secret here is gaining some time in which some saving event might happen. Often, you can live in your own home for free during this period and move out with cash stowed away.
4. Lease Option Agreements allow the new property owner to rents property to you for a set period of time, after which—you, the renter—would then have the option to purchase the home, and that option is written into the contract. Lease options also can work like a “leaseback” but in this case the buyer would set a price and determine terms for the seller to purchase the home back after a set period of time. Quite often, this option is given to people with less-than-perfect credit who would have difficulty acquiring a loan but who have a solid income-to-debt ratio.

If you thought the game was over when foreclosure looms, think again. If you remember to keep cool during the crisis and look at all of your options, you just may be able to stay in your home!