People that find themselves facing a foreclosure and know they can no longer afford their home but want to avoid having a foreclosure attached to their credit record can turn to the federal government’s Home Affordable Foreclosure Alternatives (HAFA) for help.
HAFA helps people communicate with their mortgage lender and transition from a mortgage into a short sale or a deed in lieu of foreclosure. In a short sale the mortgage company is willing to accept the amount you can get for the sale of your home, it’s called a short sale because, due to your current housing market, the amount you’ll get for your home is often short of the amount you still owe. A deed in lieu means that the mortgage company will agree to accept the title to the home and you walk away with nothing, this is another situation though where the home loan is worth more than the current value.
If you don’t want to lose your home there are some programs the federal government offers for loan modifications but if you decide to do a managed exit you still may be able to save your home in what is called a “redemption”, a period after your home has been sold that you can still reclaim it by paying all outstanding fees.
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