Living, working, and playing in San Antonio

Mortgage Loan Workout Options

In my last post we talked about options for homeowners who are having trouble making their mortgage payments and facing the possibility of foreclosure. Today I’ll go into a bit more detail about one of the options available – a loan workout program.

Let’s look at what’s available to get that mortgage back on track and save your home. Get more information here. Here are some terms you’ll want to know.

Forbearance – This is the process by which a lender allows a borrower to make partial payments or skip payments if they have a reasonable plan to catch up – such as a tax refund, a bonus, or a new job.

Reinstatement – Reinstatement occurs when all late payments are caught up and it usually occurs at the end of a forbearance period.

Repayment Plan – A plan is established to allow a borrower to make payments to catch up; the lender may allow payment of an additional amount each month until the delinquent payments are caught up.

Loan Modification – The lender may agree to amend the mortgage to avoid foreclosure. Options included adding all the missed payments to the loan amount and increasing the monthly payment to cover the larger loan; giving more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan to lower the monthly payments; switching from an adjustable rate mortgage to a fixed rate mortgage, so that the borrower is not exposed to increases in monthly payments; and/or requiring amounts for taxes and insurance to be included with monthly mortgage payments (escrowing) so that the borrower avoids large bills in addition to mortgage payments.

Deed in Lieu of Foreclosure – This is signing over the property to the lender in exchange for debt forgiveness.  WARNINGthis can hurt your credit but is better than having a foreclosure in a credit history.

Contact an attorney or accountant for advice if you’re considering any of these options.

For any San Antonio or Houston real estate needs that you, your family or your friends might have just send me an email. I’m always here to help with “Service Beyond Your Wildest Expectations!”


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