Many homeowners are seeking ways to avoid foreclosure. Between the banking crisis, rising unemployment, and declining real estate market, millions of U.S. citizens are struggling to make ends meet. Many borrowers are unable to afford their monthly mortgage payment and most owe more than their home is worth.

Fortunately, options exist to help borrowers avoid foreclosure. The most common option offered by mortgage lenders is loan modifications. When lenders modify home loans, the terms are permanently changed.

Mortgage loans can be modified to suit borrowers’ financial needs. Modified loans might include a grace period which temporarily suspends or reduces the monthly payment. Others might require borrowers to cure mortgage arrearages before the loan can be altered.

Some lenders will place past due payments at the end of the loan; extending the repayment schedule. Each bank must adhere to standard protocol; however, loan modifications offer some flexibility when restructuring the mortgage note.

In order to obtain a modified loan, borrowers generally work with a bank loss mitigator. When homeowners become delinquent with payments their account is assigned to an employee in the loss mitigation division. Loss mitigators are responsible for working with borrowers to develop a suitable repayment plan to stop foreclosure.

With the constant influx of bank foreclosures, loss mitigators carry a heavy workload. Borrowers can increase their chances of obtaining a loan modification by organizing financial documents and being prepared to provide information prior to contacting their lender.

Borrowers should prepare a list of income and expenses. Include household expenses such as utilities, property taxes and insurance. List credit card balances and monthly payments, food expenses, daycare, health insurance premiums, automobile payments or transportation costs, and any other expenses incurred on a regular basis. This will help determine how much can be contributed toward the mortgage payment.

Bank loss mitigators are extremely busy people. They appreciate working with borrowers who are organized and prepared. Loss mitigators do not make final decisions; however, they are instrumental in swaying decisions of bank management personnel. They work as a go-between and help borrowers develop acceptable payment arrangements.

When borrowers are unable to qualify for loan modifications, lenders might offer a short sale arrangement. Short sales are relatively complex, but can be a lifesaver for borrowers unable to resolve financial challenges.

Entering into a short sale agreement does not allow borrowers to keep their home. Instead, banks grant borrowers time to list their property through a realtor and sell it for less than they owe on their mortgage loan. There are pros and cons to short sales should be discussed with the lender.

When borrowers do not qualify for short sale approval, few options are left to avoid foreclosure. The only way out is to locate a buyer willing to pay the full amount of the loan or find a way to pay off mortgage arrearages and remain current on the payments.

If foreclosure is unavoidable, request a deed in lieu of foreclosure through your lender. Deed in lieu lets borrowers return the keys to their home and walk away from their property. Deed in lieu and short sale agreements will cause credit damage, but are usually let detrimental than real estate foreclosure.

Author Bio: Simon Volkov is a seasoned real estate investor who specializes in helping homeowners avoid foreclosure. Simon has engaged in hundreds of successful short sale transactions in California, Florida and Washington. If you need to sell your house to stop foreclosure or satisfy a short sale agreement visit www.SimonVolkov.com today.

Category: Finances
Keywords: avoid foreclosure, loan modification, stop foreclosure, deed in lieu of foreclosure, short sales