Mortgage Options
Courtesy of
ForeclosureOptionsNetwork.Com 1-877-747-4386

OPTIONS
PROS
CONS

Refinance:
Pay off current loan and obtain a
new mortgage institutional lender
or private lender.

Low interest rates, lower monthly
payment, get out of Alt-A loan or
Option Arm. Fixed payment for
the remainder of the loan.
If current loan is a purchase loan
(non-resource loan) a refinanced
loan becomes a recourse loan.
Monthly payment might increase.

Loan Modification:
Change the terms of the existing
loan. 30 year amortized loan.

Low interest rates. Get out of an
Option Arm that will recast or
reset. Borrower places
permanent financing on the
property.

The monthly payment might
increase. Many borrowers cannot
service the principle payment.
Loan modification has an 80%
failure rate. Borrower agrees to
sign off legal recourse to original
loan.
Loan Modification:
Change the terms of the existing
loan to a 5 year interest only.

Lower monthly payment. Provides a 5
year window before next recast or reset.

Provides no long term solution. Same
as above. Need strategic tax plan.
Unknown lending environment in
4-5 years.
Short Refinance:
Principle write down obtain
financing with new lender
institutional or private.
Obtain a principle write down,
lower monthly payment through
an FHA program or debt negotiator.
Very few qualify. Most FHA
brokers will not negotiate
principle write down. No
leverage for the borrower.
Short Sale:
The lender(s) accept a short
payoff from the borrower.
Borrower is able to get out of a
home they cannot afford.
Borrower may qualify for a new
mortgage in 18-36 months.
Potential tax consequence. A
potential deficiency. Credit
'ding', typically 80-100 points to
the credit score. Can remain on
Credit Report for 7 years.
Hybrid Short Sale &
Credit Card Settlement Combo:
The lender(s) accept a short payoff from the borrower. Unsecured creditors accept a reduced payoff.
Borrower is able to get out of a home
they cannot afford and settle credit
card debt all at once. Borrower may
qualify for a new mortgage in 18-36
months.
Potential tax consequence. A
Credit 'ding', typically 90-100
points to the credit score. Can
remain on Credit Reports for 7
years.

Bankruptcy:
Borrower must qualify for
bankruptcy strategy.

Borrower may be able to keep their
home. Chapter 13 lien stripping.
Borrower may gain relief from other
debts. Borrower may qualify for a new mortgage in 18-36 months.
Borrower may not be able to keep
their home. A credit 'ding', typically
120 points to the credit score.
Bankruptcy can remain on the credit
report for 10 years.
Loan audit:
Loan audit to obtain legal leverage for agreeable workout with lender(s).
Borrower may obtain principle
reduction, loan work-out, short
sale, Deed in lieu with no credit
hit.
Fees associated with a loan audit.
Fees associated with a negotiator.
Fees associated with legal
representation. No guarantee for a
positive outcome.

Fannie Mae & Freddie Mac are
Government Sponsored Enterprises and set the quidelines for most residential lending.
www.fanniemae.com/loanlookup
www.freddiemac.com./mymortgage

 

Government Loan Modification Programs:

www.hud.gov
www.makinghomeaffordable.gov

This table is intended to provide practical information with regard to the subject matter covered. It is offered with the understanding that the Foreclosure Options Network is not engaging in rendering legal, tax or other professional services. If legal, tax or other expert assistance is required the services of a competent professional should be sought.