From the Colorado Foreclosure Hotline
Short-term Repayment Plan
A mortgage company may negotiate a short term repayment plan by asking the borrower to begin paying the full payment due plus a partial payment to get the loan caught up.
Forbearance agreements allow the borrower to catch-up on the mortgage payments over a longer period of several months. With forbearance agreements, you may be able to postpone payments for a period of time, depending on circumstances.
Refinancing occurs when a borrower applies to re-write the mortgage loan through the current mortgage company or through another program. This process may lower the interest rate, establish a fixed rate, lower the monthly payment, or provide a combination of those outcomes. The purpose of refinancing is to make the mortgage payments more affordable and to prevent future default.
A modification changes one or more of the original terms of the loan, such as the interest rate, payment amount, maturity date, or the amount of the unpaid principal balance. A modification can cure the default by adding the delinquent amount to the end of the loan or reducing the monthly payment, whichever is more affordable for the borrower.
Partial or Advance Claim
Qualified FHA borrowers may be eligible to obtain an interest-free loan, also called a partial claim, to bring mortgage current. The borrower initiations a promissory note and a lien is placed on the property util the note is paid in full.
Selling the Property
If the borrower has sufficient equity, the best option may be to sell the property prior to foreclosure and net enough from the sale to pay the remaining balance on the loan.
Some mortgages can be assumed (taken over) by a third party. When a mortgage is assumable, the property can be transferred with the new owner taking over the payments. If payments were behind when the mortgage was assumed, without a workout agreement, the person assuming the mortgage will be in default and subject to foreclosure. The advantage may be that the assuming party is in a better position to deal with the default.
Short sales must be negotiated with the mortgage company to sel the property for less than the amount necessary to pay the loan. In doing so, the mortgage servicer agrees to accept the proceeds of the sale (or some other agreed upon amount) to be applied toward the debt.
Deed-in-Lieu of Foreclosure
A deed-in-lieu of foreclosure is a borrower?s voluntary conveyance of the title to the mortgage servicer in exchange for discharge of the debt. In accepting the deed, the mortgage servicer is also accepting responsibility for all liens against the property including judgments, junior liens, lease obligations, etc.