Peter

There are many factors that have contributed to the foreclosure crisis in Colorado and across the country, including loss of income, adjustable rate mortgages (ARMs), and the general state of the economy.  Medical emergencies, a death in the family, and a divorce can also contribute to an impending foreclosure.  Excessive debt and unexpected major home maintenance expenses can also be key factors.  But the best way to avoid foreclosure is to prevent the filing of a “Notice of Default.”

Lenders do not want to foreclose but will file a Notice of Default to protect their interests if necessary.  If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender.  Don’t put it off, be embarrassed or ignore letters from your lender because those responses will make the situation worse, not better.  Depending on your particular situation and hardship circumstances, here are some options your lender might propose to you:

Time to make up your payments:  Lenders might agree to wait before taking legal action against you and let you work out a repayment plan that is affordable for you.  This is called forbearance.

Forgiving a payment: If you can agree on a way that you will be current after missing a payment or two (without the means to pay it back), the lender might give you a break and waive your obligation.  This is called debt forgiveness, and it rarely happens.

Spread out the missed payments over a longer term: For example, if your payment is $1,200 a month, the lender might let you add $100 a month to each payment for a year until you are caught up.  This is called a repayment plan.

Changing the terms of your loan: If your loan is an adjustable rate mortgage, the lender might freeze the interest rate before it increases or change the interest rate to something more manageable.  A lender might also extend the amortization period, which is called a note modification.

Add the back payments to your loan balance: If you have sufficient equity and meet the lender’s lending guidelines, the lender might increase your loan balance to include the back payments and re-amortize the loan, which is a refinance.

Other options include selling the home by using one of the experience brokers at The Kentwood Companies.  No other group of real estate professionals is more knowledgeable about real estate in Denver and how to sell a home under any market situation.  You could also consider a “Short Sale” if your home is worth less than the amount you owe.  Another option is to sign a Deed-in-Lieu of Foreclosure, or deeding the home back to the lender.

Avoiding a foreclosure is critical and using the resources available through The Kentwood Companies is a good place to start in order to save your real estate investment and good credit rating.  Visit Denver Real Estateand contact a leading agent at the office nearest you.