Welcome
Future financial security is unclear for many people due to COVID, loss of employment, forbearance, health concerns, and children who are displaced from the schools and friends. NextHome Metro Real Estate Services is your local advocate and would like the opportunity to assist you in your time of need.
know your options
If you are falling behind in your mortgage payments or are not sure how you will be able to make your next payment, you have options. These options include:
- Forbearance
- Short Sale
- Refinance
- Loan Modification
- Deed-in-Lieu of Foreclosure
- Foreclosure
forbearance
What is a Forbearance?
- With this option, you and your mortgage company agree to temporarily suspend or reduce your monthly mortgage payments for a specific period of time. This option lets you deal with your short-term financial problems by giving you time to get back on your feet and bring your mortgage current.
Forbearance may be an option if you are:
- Behind on your mortgage payments or on the verge of missing payments
- Experiencing a temporary hardship
How does it work?
Forbearance reduces your monthly mortgage payment—or suspends it completely—during the forbearance period. If you qualify for forbearance, you and your mortgage company will discuss the forbearance terms:
- length of forbearance period,
- reduced payment amount (if the payment is not suspended), and
- the terms of repayment.
After the forbearance has ended, you will need to repay the amount that was reduced or suspended.
Other options to that may be available to you include:
- Repayment Plan
- Payment Deferral
- Refinance
Short sale
What is a short sale?
What is a short sale?
A short sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage servicer agrees to a short sale, you can sell your home and pay off a portion of your mortgage balance with the proceeds. Depending on your situation you may be required to make a financial contribution toward the balance, but once the short sale is complete you’ll be relieved of your responsibility to pay any remaining balance—called a “deficiency waiver.”
A short sale is an alternative to foreclosure and may be an option if you:
- Are ineligible to refinance or modify your mortgage
- Are facing a long-term hardship
- Are behind on your mortgage payments
- Owe more on your home than it's worth
- Haven't been able to sell your home at a price that covers what you still owe on your mortgage
- Can no longer afford your home and are ready or need to leave
What are the benefits of a short sale?
- Eliminate your remaining mortgage debt
- Avoid the negative impact of foreclosure
- Receive relocation assistance in some cases — up to $3,000
- Start repairing your credit sooner than if you went through a foreclosure
- May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years)
Foreclosure
What is a Foreclosure?
A foreclosure is the legal process where your mortgage company obtains ownership of your home (i.e., repossess the property). A foreclosure occurs when the homeowner has failed to make payments and has defaulted or violated the terms of their mortgage loan.
A foreclosure can usually be avoided—even if you already received a foreclosure notice. See the chart (in "Foreclosure Comparison") to compare some other options: Short Sale and Mortgage Release (Deed-in-Lieu of Foreclosure). No matter the option, you must take action as soon as you can.
What happens if your home is foreclosed on?
Walking away from your home voluntarily, may seem like the best solution when your home is valued lower than what you owe. However, this action may lead to financial consequences in the future. In some states, you may be required to pay a portion of your mortgage debt even after the home has entered foreclosure. Also, the impact to your credit may make it difficult to rent or purchase a home in the future. It may be best to explore other options to foreclosure with your mortgage company before making a decision to leave your home.
Keep in mind, your mortgage company doesn’t want to foreclose on your home. Just like there are consequences for you, the foreclosure process is time-consuming and expensive for them. They want to work with you to resolve the situation. However, some homeowners simply don’t take advantage of the help available and foreclosure becomes the only option.
For example, foreclosure could result in you:
- owing the mortgage company the deficiency balance of your mortgage (the deficiency balance is the remaining total mortgage balance after the sale price of the home)
- lengthening the time you could receive a Fannie Mae mortgage to purchase your next home to at least 7 years
What are the consequences of a Foreclosure?
- Eviction from your home—you’ll lose your home and any equity that you may have established
- Stress and uncertainty of not knowing exactly when you will have to leave your home
- Damage to your credit—impacting your ability to get new housing, credit, and maybe even potential employment, for many years
- May owe a deficiency balance after the foreclosure sale
- Lose any relocation assistance or leasing opportunities that may be available with other options
- Forfeit ability to get a Fannie Mae mortgage to purchase another home for at least 7 years (Fannie Mae guidelines)
What is the process for a Foreclosure?
There are two main types of foreclosure:
- Judicial – supervised by a court with formal legal proceedings (civil law suit)
- Non-judicial – non-court supervised
In both types of foreclosure, the homeowner receives the legal notice of foreclosure, the legal notice is published in the local paper (in most cases), and the home is sold at public auction. (For judicial foreclosures, you’ll be served with legal notice of the pending action, and the court will approve or set the foreclosure date and sale.)
The process and timing of a foreclosure can vary by state laws, and many other factors. However, your mortgage company can begin preparing the default notice/foreclosure proceedings on your home as early as 60 days after you have missed your first payment. That’s why you should take action early to begin working with your mortgage company to resolve your payment problems immediately.
How Do You Avoid Foreclosure?
The most important thing—take action now. You have nothing to lose (and everything to gain) by working with your mortgage company to avoid foreclosure.
If foreclosure is imminent, other options may no longer be available. However, you may still be able to leave your home without having to go through foreclosure. This means you won’t have a foreclosure on your credit history and you may qualify for relocation assistance to ease your transition to new housing.
Deed-IN-lieu of foreclosure
What is a Mortgage Release?
A Mortgage Release is where you, the homeowner, voluntarily transfer the ownership of your property to the owner of your mortgage in exchange for a release from your mortgage loan and payments. Options are available (sometimes with a relocation incentive) to help you leave the home immediately; stay in the home for up to three months without paying rent; or lease the home (at market rates) for up to one year. Depending on your situation, you may be required to make a financial contribution to receive a mortgage release.
A Mortgage Release is an alternative to foreclosure and should be considered if:
- You are ineligible to refinance or modify your mortgage
- You are facing a long-term hardship
- You are behind on your mortgage payments or will fall behind in the near future
- You owe more on your home than it’s worth
- You don’t want to sell your home or haven’t been able to sell your home
- You can no longer afford your home and you are ready to leave
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