What are your options when you are already in foreclosure?
It can be a very distressing time if you are already facing foreclosure. Have you tried all possible options such as refinance, restructure your payments, short sale and Home Affordable Modification Program but in vain? It might seem the end of the road where you are left with perhaps no option at all.
In this case, Mortgage Release seems to be one viable alternative. This process is a relatively new Fannie Mae ‘Deed-in-Lieu’ of foreclosure program that allows you to voluntarily transfer the right of the property to your mortgage owner. Read along if you want to know more about Mortgage Release and how you can benefit from this if you are already facing foreclosure.
What is a Mortgage Release?
A Mortgage Release is a process where you, as a homeowner, voluntarily transfer the possession of your property to your mortgage owner in lieu of a release from your mortgage loan and payments. Mortgage Release presents struggling homeowners with flexible transition options for how you can leave you home at your own terms:
• You can leave your home immediately and you don’t have to wait for your property to sell. And you may also be given assistance with relocation. You can consult your mortgage company for more details.
• You can stay in the house for up to three months without having to pay the rent. This helps you to save money to move out and find another option.
• You can choose to lease the home for up to one year at reasonable market rates. This is a very useful option for families that need more time to plan or have kids who must finish the school term before they can be moved.
According to John Kennedy, director of Fannie Mae’s National Servicing Organization: “We recognize foreclosure doesn’t have any benefits, and that’s why we put together programs like Mortgage Release. The program provides homeowners an easy process and the ability to exit their home gracefully.”
When should you consider this option?
A Mortgage Release is an option in the face of foreclosure if you are:
1. Not eligible to refinance or to modify your mortgage
2. Way behind on your mortgage payments or are likely to fall behind
3. Not eligible for the option of short sale or owe more than what your home is worth
4. You want to stop foreclosure and want to leave your house
What are the benefits of Mortgage Release?
1. Free from mortgage debt
2. May get financial help with relocation if you decide to vacate immediately
3. Your credit springs to a better shape faster than if you have decided to go for foreclosure
4. May be eligible for Fannie Mae mortgage in order to buy a home sooner than if you went through foreclosure as the last option
5. Flexibility to leave your house at your own terms
Want to get started with Mortgage Release process? This is how you can.
First of all you will need to contact your mortgage company to know whether you qualify for Mortgage Release or not. Here is quick know-how for how can you get started and what steps are involved in the entire process:
1. Understand if you are eligible for the process and complete all the formalities if you are. This will include estimating the value of your property, how much amount you owe the mortgage company etc.
2. Assessing all the available options to leave your house.
3. Sign all the standard pre-closing documents.
4. You will be ready to take the action according to the option you have chosen – whether leaving immediately, after 3 months of no rent payment or leasing the home for up to one year.
Whenever you decide to leave, according to the pre-agreed terms, you will be required to leave the home in perfectly good condition and need to remove all your personal belongings before you move out.
Consult a real estate professional – an agent as well as a lawyer
You might think it will cost you a lot to pay for the attorney’s fees but it is always advisable to spend at least an hour with a reputed real estate lawyer. It may well be worth it to ensure there are no hidden surprises or any pitfalls that will be difficult to overcome at a later stage. Similarly, a real estate agent will be able to give you practical advice under your trying circumstances knowing perfectly well how good-will helps in getting reference from friends and relatives. Moreover, they will know you might use their help next time you are set out to buy or sell a house.