There are options outside of foreclosure available to homeowners who have fallen behind on their mortgage payments. Many banks have taken measures to slow down foreclosures and help troubled homeowners. Citibank not only has put a moratorium on foreclosures into effect, it is even communicating and working with homeowners who are not currently in foreclosure but at risk of defaulting on their mortgage.
The methods used to modify loans often depend on the bank and mortgage type. Listed below are a few approaches exercised by banks to modify loans including but not limited to:
1.) Deferring all late payments to the end of the loan in order to help the homeowner get back on track.
2.) Increasing the duration of the loan in order to reduce the mortgage payment.
3.) Placing a lien on the property via a 2nd mortgage for the unpaid amount.
4.) Freezing the interest rate for borrowers with an Adjustable Rate Mortgage (ARM)
5.) Refinancing and reducing the loan up to 90% of the current appraised value for subprime borrowers (if permitted by the existing mortgage holder). Note: Once homeowners sell the property, the Federal Housing Administration (FHA) may keep a percentage of the net proceeds.
You can find out if you are eligible for a loan modification by contacting your lender. There are options outside of foreclosure, even if you cannot modify your loan. Contact your Colorado Springs Real Estate Agent for assistance.
Colorado Foreclosure Prevention Hotline: 1-877-601-4673
HUD Housing Counseling and Referral line: 1-800-569-4287