FORBEARANCE AGREEMENTS, REINSTATEMENTS, AND DEEDS IN LIEU OF FORECLOSURE

Mortgage servicers usually provide homeowners with notification of their “Options” once the homeowner misses their first mortgage payments.  Lenders will often encourage homeowners to reinstate their loan.  Reinstatements include paying all the past due payments, interest, late payment charges and attorney fees.  Servicers often initially offer repayment plans or forbearance plans.  The lenders encourage the homeowner to pay a portion of the delinquency each month, along with the regular monthly installments.

Often, the servicers will encourage the homeowner to agree to a forbearance agreement or reinstatement to become current in your mortgage.  However, these agreements simply require the homeowner to pay back all payments, including interest and fees, in a very short period of time.  Worse, the forbearance agreement often keeps the property in foreclosure and simply postpones the foreclosure sale.  Often, the lenders will require the homeowner to pay a large sum of money up front.  If the borrower does not comply with the forbearance agreement, a foreclosure sale takes place.  Sometimes, the borrower does not even know about the sale until after it occurs. 

A Deed In Lieu of Foreclosure may be advantageous to a homeowner under certain situations.  The goal is to have the lender agree to accept the Deed to the property in exchange for forgiving any personal liability and avoiding the foreclosure process.  However, issues regarding deficiency judgments are complicated and it is important to seek qualified legal assistance to understand your rights and potential liability!

There are benefits and drawbacks to these options, and one should discuss these options with an attorney qualified and experienced in this area of law.  We encourage you to contact us at (888) MRLC-NOW or (310) 773-0377 to schedule a face to face meeting with an experienced and qualified attorney.

BACK