6.  Foreclosure Bail Out Loan - Is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage and it is common for interest rates to approach 10-15%. Points can be as high as 5 and terms are usually short. In the 5 year range where a balloon payment will be due for the remaining balance. In order to qualify you must have sufficient equity. Hard money lenders are looking for 65-75% max loan to value and a decent equity cushion. You also have to have ability to repay as in a traditional mortgage.

 7.   Deed-in-lieu - is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender.

The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure.

Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred.

Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower. Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.
Retrieved from “http://en.wikipedia.org/wiki/Deed_in_lieu_of_foreclosure”

8. Chapter 13 Bankruptcy- As of the date of this writing, the federal bankruptcy courts do not have the authority to restructure mortgages. However, this seems to be a popular method that is being used by homeowners and attorneys to delay foreclosure on their home.  

This is primarily used as a “stall” tactic and is not a “cure” all for your mortgage problems. In some cases Chapter 13 bankruptcy filings are being abused and portrayed by some bankruptcy attorneys as an effective way to “stop foreclosure” when in fact it is only and effective method to “delay foreclosure”.

In order to qualify for Cahapter 13 bankruptcy you will have to have a steady income. The bankruptcy petition would need to be filed before the sale date of your property.

After filing, you will propose a plan to repay the amount you fell behind on the mortgage. You will also begin to again pay your regular mortgage payments, which under the operation of law must be accepted by your mortgage company.

A forced loan modification (non-mortgage) can be sanctioned by the courts if it is proved that the borrower cannot afford the current payments. The concept is similar to debt consolidation, but it permits you, the consumer(s), to pay unsecured debt down without accruing interest (student loans are an exception) and without having to deal with those annoying calls from debt collectors.

Under a typical plan, you make monthly payments to a court appointed bankruptcy trustee for generally three to five years. The amount of your monthly payment is determined by several factors such as the amount of debt you have, your ability to repay and the extent that you have assets. In exchange for stopping any and all collections activity, one proposes to pay all or, in specific circumstances, a portion of the debt through a Chapter 13 plan. The filing of a Chapter 13 bankruptcy stops ALL collection activity though something called the automatic stay. The automatic stay remains in effect during the life of the case unless the court orders otherwise.

You can always refinance or sell your home while under Chapter 13 if you wish to pay off the bankruptcy and move on with your life. The Chapter 13 stops the foreclosure immediately. Often, your only other option would be to refinance, or enter into a repayment agreement with your mortgage company. All too often, they want a double payment each month until you can catch up.

If you had that kind of disposable income, you probably wouldn’t be in this situation in the first place.

The Foreclosure Fraud Alert Website http://www.foreclosurefraudalert.com/

The Foreclosure Fraud Alert Blog  http://www.foreclosurefraudalert.com/fraudblog