The North Fulton Blog

In my last post, I discussed the alternatives to foreclosure available to homeowners.  I then discussed 4 of them in more depth.  I wanted to continue that discussion today. 

Refinance - If the homeowner has sufficient equity in the home and their credit has not been too badly damaged, they may be able to refinance.  This also may be a short term solution since payments are usually higher than what they were since they include closing costs.  If the hardship that caused the late payments is still an issue, chances are the owners will be late again, plunging them back into the foreclosure scenario. 

Mortgage Modification - Mortgage lenders have attempted to modify some mortgages to assist homeowners by making them more affordable.  These modifications may take the form of lower interest rates or a reduction of the principle owed.  The federal government has attempted to forestall the tide of foreclosures with the creation of the Home Affordable Modification Program (HAMP), where incentives are paid to lenders that successfully modify homeowner mortgages and avoid a foreclosure.    Many of those that have received a "trial modification" slip right back into default usually since they hardship that caused the situation in the first place has not been eradicated.  Since the numbers of successful mortgage modifications has been extremely small, this HAMP program has largely been considered a failure.

Short Re-fi - This is a relatively new option offered by some lenders.  It involves a refinance of a home with a reduction in the principle balance and lower interest rates.  The borrower will have to show a hardship and be able to show that they can pay the reduced amount before being approved. 

In My next post, I will cover the remaining alternatives.