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Foreclosure in United States of America

Some other options, which can be resorted while facing foreclosure, are as follows:-

  • PARTIAL CLAIM: - The lender may work with you to obtain an interest- free loan from HUD to bring your current mortgage. You may qualify if your loan is at least 4 months delinquent, and not more than 12 months delinquent. In addition, your mortgage should not be in foreclosure and you have commenced making full mortgage payments. When the lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay the lender the amount necessary to bring the mortgage current. In such a scenario, one is required to execute a Promissory Note, and a Lien is placed on the property until the Promissory Note is paid in full. The Promissory Note is interest-free, and will be due if one sells or leaves the property, or when the mortgage matures.
  • PRE-FORECLOSURE SALE:-This will allow one to sell the property and pay his mortgage loan avoiding foreclosure and damage to credit rating. A criterion for the qualification is, the appraised value should be at least 70% of the amount due and the sales price must be 95% of the appraised value. Secondly, the loan must be at least 2 months delinquent prior to the pre- foreclosure sale closing date. In consequence, a borrower is able to sell the house within 3 to 5 months (depending upon what lender agrees on). An additional benefit to this option is the assistance received with the Seller-paid closing costs.
  • DEED IN LIEU OF FORECLOSURE: - This is considered the last resort; borrower can voluntarily "give back" the property to the lender. This won't save the house, but it will help one’s chances of getting another mortgage loan in the future. Criterion for qualification is one should be default and does not qualify for any of the other options. Secondly, one’s attempts at selling the house before foreclosure were unsuccessful. Thirdly, one does not have another FHA mortgage in default.

The above stated situation in both the articles can be discussed with the housing counseling agency which can help the borrower in determining the most appropriate option.

Nevertheless, beware of frauds. Solutions that sound too simple or too good to be true usually are. If one is selling the home without professional guidance, one should be beware of buyers who try to rush through the process. Unfortunately, there are people who may try to take advantage of financial difficulty.

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