Surviving A Foreclosure
A foreclosure occurs when a homeowner is no longer able to meet their mortgage obligations in a timely manner. After a prolonged period of default, the financier will be forced to foreclose the property so as to earn back whatever they can from its consequential sale. There are several methods through which homeowners can avoid facing a foreclosure, including seeking loan modification services, declaring bankruptcy, securing a short sale or negotiating a forbearance.
In the event a homeowner is completely unable to make monthly mortgage payments, the lending facility may extend a forbearance to them. A forbearance is simply an extension or moratorium extended to the homeowner to suspend monthly payments for a specific period of time until they are able to resume to their regular payments. Although it is not mandatory for the financier to offer and the homeowner to accept such an agreement, a forbearance is a stop-gap measure that gives the homeowner enough time to find new sources of income or alternative employment options.
A forbearance endeavors to reduce any possibility of facing of a foreclosure and ensure families do not lose their homes without a fighting chance. Unlike the loan modification options, a forbearance will provide the homeowner with a 3 to 12 month grace period before monthly contributions can resume as normal. A financial audit of the homeowner will be implemented to make sure they will be able to resume regular payments once the grace period lapses.
Upon initiation of a forbearance, a loss mitigator will be assigned to the homeowner to act as a liaison between them and the financier. The key roles of the loss mitigator will be to keep both parties abreast on financial information, clarify any issues in the proposed repayment structure and make necessary recommendations to the financier. This newly acquired relationship is intended to make the transition for both parties smooth and clear.