Over the next few weeks I am going to write about the options for homeowners facing foreclosure. Hopefully through these pages I will be able to help people better understand their options if they are experiencing the foreclosure process in the Charlotte, NC area.

A foreclosure begins when a homeowner gets behind on their mortgage payments. At this point the lender will usually send out a few letters to the homeowner of the property. In these letters the bank will basically ask the homeowner to pay the missed back payments, or the bank will proceed with the court process of taking the property from the homeowner. There are certain dates within these letters that give homeowner's the chance to make all of the backpayments before the lender starts to heap legal fees on top of the missed mortgage payments.

At this point a homeowner has a few options. Two of them are to bring the loan current, or to do a loan workout or forebearence plan with the bank. We are going to dive into these two options first, and then explore other options in upcoming posts.

When you do this, you need to remember three important things:

1. Always get any agreements or promises in writing.

2. The lender will setup a specific program for how the back payments are either paid or added to the backend of the loan's life.

3. The important thing to do throughout this process is to stay in contact with the lender and be honest about your situation.

LOAN WORKOUT or "FORBEARANCE PLAN"

If a homeowner is unable to make their payments, the lender may help with a loan workout by agreeing to suspend payments or accept partial payments for a limited time, until the homeowner will be able to begin an accelerated repayment schedule.

A loan forbearance gives a temporary suspension of payments on a loan, to help the borrower get through temporary financial difficulties. This means that for a certain period of time, they would either pay only a portion of their regular mortgage payment or not make any payments. At the end of the time period, they would be required to resume regular monthly payments with additional money added to the payment to make up for the past due amount.

This workout will hopefully lead to the reinstatement of the loan. Lenders can agree to wait before taking legal action against the homeowner and let them work out a repayment plan that is affordable for the borrower. The bank will consider this option if the homeowner has recently experienced a drop in their income due to unemployment or illness.

BRINGING THE LOAN CURRENT or “REINSTATEMENT”

A reinstatement occurs when the loan is brought current by paying the total amount past due. This is the simplest & most effective way to stop foreclosure! Homeowners usually have the right to fully reinstate their loan within 90 days of being served with a Notice of Default. If they are now able to make their mortgage payments, or their income has risen, they can bring their loan current by paying off missed payments.

Another way to do this is if the lender arranges an increase in monthly payments until the loan is brought current. This means that each month they would add an additional amount of money (determined by the bank) to their regular monthly payment until the amount that was owed has been repaid. If they can show the bank that they are able to resume making payments, and that they can make up the past due balance by either a lump sum or over a short period of time (1 to 2 years), then they can “reinstate” their mortgage and keep their home.

These are just two of the options available to homeowner’s facing foreclosure. In the coming weeks I will be posting other option’s available, so please check back & leave any comments below that you feel would be beneficial to this post.