What to do?
Bankruptcy? It will delay things, but banks will ask the judge to remove the house from bankruptcy, exposing it to foreclosure. Your attorney will explain what your chances are. When you talk to an attorney, we advise getting two opinions, one from a bankruptcy specialist, and one from another kind of attorney.
Deed in lieu of foreclosures? It is a voluntary foreclosure, not a forced one. Banks love this because it saves them a ton of money. Frankly, we know of no advantage to the homeowner, because credit bureaus treat it just like foreclosure. So do banks when you want a new mortgage, which you can't get for about 5-7 years. Actuallly, you may be able to get an expensive mortgage.
Refinance? If your credit is good, that can be your best option. If not, there's no possibility of refinance. Worse, a Refinance requires you to have at least 20% equity, and equity is what the housing market has stolen from everyone. Refinances are very rare these days.
Forebearance? If there is a special reason, like being displaced by wildfires, a forebearance might be offered. Banks will only do that when ordered to do so by the federal or state government. Moreover, banks will report you to credit bureaus as late, and your credit card payments will double or triple.
There are a dozen other options, none of them very good, except for two in the right hand column.
What to do?
Short Sale? If your home is "upside down" and you have a genuine hardship, that is, you can't pay the mortgage, then a Short Sale can be your only reasonable option.
You don't have to repay a Huge Debt. We take it upon ourselves.
A short sale is a sale, so you have to move. If you happen to have a Freddie Mac loan, you might be allowed to lease your home back from a buyer, but only if you have a Freddie Mac loan.
It does not show as a Foreclosure on your credit. We negotiate very hard to have banks show "Paid As Agreed" on your credit report, but sometimes they won't give. In any case, "Settled for less than owed" is far better than "Foreclosure."
You have some control over when you move. We can stretch the time period out, within reason, or can close very quickly.
In only Two Years, you can get a new Fannie Mae loan for a home, and start over again. Your credit will probably be fine by then. We pay for Credit Restoration, on short sale completion.
Loan Modification? If you want to stay in your home and can afford a lower payment that doesn't choke the bank, this might work. It has several downsides. Your chances of getting one are nearly zero. Only a small number of Those meet final approvalThe Obama Plan / HAMP / MHA is a 5-Year ARM, and your payments will increase. The better your initial deal with the bank, the more they will increase. Payments might be more than double in eight years.
If the bank defers principal to get your payments low, you will have to pay it back in a Lump Sum (Balloon Payment) if you sell, or refinance. Interest will make it double in about 26 years.
