Foreclosure In The Greater Boston Area – Loan Options Available To Home Owners

While foreclosure is a traumatic and stress inducing event, there are options available to you as the owner of the house. If you take action quickly, these options will allow you to stop the foreclosure process and save yourself a lot of problems.Options That Allow You to Keep Your House

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As the title suggests, there are a few options available to homeowners, which if exercised properly will allow you to stay in your home and stop foreclosure simultaneously.

  • Loan Modification: One of the most popular options available, this government-backed program will allow you to change the original mortgage loan agreement as long as you can prove that you have undergone some huge financial setback. While different types of changes are allowed in the program, all will result in a smaller monthly mortgage payment. Since it is a government program, you must meet a lot of requirements to be eligible.
  • Refinancing: Don’t rule it out! If you find that you are not eligible for a loan modification program, then refinancing your mortgage loan i.e. replacing your old mortgage loan with a new one with completely different terms, might be a better option. Even for refinancing there is a government-backed program known as “Home Affordable Refinance Program”. This allows for refinancing even if the value of your home has fallen so much that you own more than the market value of your home.
  • Repayment: If foreclosure procedures have started because you owe the mortgage lender more than three months of rent, then try to create a repayment plan with your lender. Create a plan that will allow you to repay the amount owed over a specific period of time it takes to bring your loan current.
  • Forbearance: A forbearance agreement is a temporary suspension on your monthly payments for a few months. If the financial setback that prevented you from paying your monthly payments is temporary in nature and you know that you will be back on your feet within a few months, try to talk to your lender to get a forbearance agreement for that period. Don’t assume all lenders will reject this – some lenders do have such programs or options available.

 Options That Require You to Leave Your House

If you find that you no longer can make the mortgage payments on your house, you will need to move out. There are a few options available that will at the very least allow you to save your credit scores to allow you to get another loan within perhaps 2 years. This will be better in the long run because a foreclosure will prevent you from purchasing a new house for 7 years and damage your credit scores severely.

  • Short Sale: A sale where you will sell your house and use the proceeds to pay back the amount owed. Depending on the amount you sell it for, you might be able to repay the entire amount owed. At the very least, you will be able to repay back a part of the loan.
  • Release of Mortgage: Another option if you do not want to make the effort to make the sale is to get a mortgage release. You agree to transfer the ownership of your home in return for a release from all obligations as far as the loan and its payments are concerned.

Lender Tip: The worst thing you can do is *nothing*. Rather than do nothing, contact us if, whether you’ve exhausted other options or not.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317


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