Specific Options Homeowners’ Have:
Forbearance – lenders may let a borrower pay less than the full amount of the mortgage, or skip a few payments, if there is a reasonable plan to bring the loan current.
Reinstatement- A homeowner may be able to make a payment that covers all of the previous late payments, usually at the end of a forbearance period.
Repayment Plan- Lenders may allow a borrower who has fallen behind to make
additional payments each month until the past due amount has been paid.
Loan Modification- Lenders will sometimes change the terms of a loan to help a
homeowner avoid foreclosure. Options include these:
1: Adding all the missed payments to the loan amount and increasing the monthly payment to cover the larger loan.
2: Giving the homeowner more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan to lower the monthly payment.
3: Requiring amounts for taxes and insurance to be included with the monthly mortgage payment to avoid large bills in addition to the mortgage.
Debt Forgiveness- A homeowner could be allowed to sign over the property to the lender
in exchange for debt forgiveness, an option that can damage credit but one that is better than having credit history of foreclosure.
Short Sale – A short sale is when the lender agrees to accept less for the property than is actually owed on the property
