This is more common than you may imagine. Many individuals discover themselves in a situation in which the home that they purchased as an investment has turned into a financial burden or even a liability. Sometimes this is due to changes in interest rates, loan terms, relocation, employment or marital status. Regardless of the circumstances, it is nothing to be ashamed of, but it is extremely important to deal with.

As a pre-closure and investment property specialist, it is my responsibility to treat you with dignity and compassion as we address this important issue together. There may not be much time, so you need to know and understand your options.

Fortunately, the seller, buyer and the bank or finance institution have very similar goals, to reach a mutually agreeable arrangement - quickly!

Goal of the Seller:
As a seller, you want to maximize the amount of the sale in a very short time. As the seller, this may help to avoid foreclosure, protect your credit and move quickly into another home that fits your current budget. We may be able to create a bidding environment to find the best offer within your time constraints.

Goal of the Buyer:
As a buyer or an investor, there are opportunities to purchase homes below the local market value, enabling a quick turn on investment for a profit. In many cases, property value can be increased by minor renovations or modifications.

Goal of the Bank / Financial Institution:
The bank or financial institution would rather receive a return on the loan through a sale than take possession of the property. Banks would rather handle funds than homes, and are typically supportive of the seller and the buyer in these instances.

Goal as Your Realtor:
As a pre-foreclosure specialist, I am also committed to helping all parties achieve maximum value and satisfaction in the transaction. I have earned a reputation for passionate commitment to my clients and apply my years of professional business experience for your benefit.

How to Avoid Foreclosure for FHA Insured Loans

The guidance below is applicable to homeowners with FHA Insured loans. While a good deal of this information may apply to all homeowners in danger of losing their homes, not all of the foreclosure avoidance tools mentioned may be available to you if you have a VA or conventional loan. Additionally, HUD/FHA does not have any Loss Mitigation oversight over VA or conventional loans. Please contact your lender or a housing counseling agency.

Q: What Happens When I Miss My Mortgage Payments?

Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you also would owe HUD an additional amount.

Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible.

Q: What Should I Do?

Q: What Are My Alternatives?

You may be considered for the following:

Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses. You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.

Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem and can afford the new payment amount.

Partial Claim. Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current.

You may qualify if:

1. your loan is at least 4 months delinquent but no more than 12 months delinquent;
2. you are able to begin making full mortgage payments.

When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a Lien will be placed on your property until the Promissory Note is paid in full.

The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the property.

Pre-foreclosure sale. This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan.

You may qualify if:

1. the loan is at least 2 months delinquent;
2. you are able to sell your house within 3 to 5 months; and
3. a new appraisal (that your lender will obtain) shows that the value of your home meets HUD program guidelines.

1. you are in default and don't qualify for any of the other options;
2. your attempts at selling the house before foreclosure were unsuccessful; and
3. you don't have another FHA mortgage in default.

Q: How Do I Know if I Qualify for Any of These Alternatives?

Your lender will determine if you qualify for any of the alternatives. A housing counseling agency can also help you determine which, if any, of these options may meet your needs and also assist you in interacting with your lender. Call (800) 569-4287 or TDD (800) 877-8339.

Q: Should I Be Aware of Anything Else?

Yes. Beware of scams! Solutions that sound too simple or too good to be true usually are. If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty. Be especially alert to the following: