Options To Leave Your Home Overview
 

Avoid Foreclosure
 

Homeowners who are struggling with their mortgage payments are facing tough choices—do you stay in a home you may no longer be able to afford or should you try to leave? While it may be difficult to think about leaving your home and making this decision, it may be the best option if other solutions to keep you in your home are no longer viable.

Don’t just walk away from your home.

There are better options. The most important thing is to avoid foreclosure—and options may be available to assist you if you are ready to leave your home. Some options may even offer cash incentives to help you move and transition into different housing. Now’s the time to take action before it’s too late.

 

 

Short Sale

If you are facing foreclosure and can no longer afford your home, you may qualify for a Short Sale—even if you don’t think you can (or haven’t been able to) sell your home.
 

What is a short sale?

A short sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds. Depending on your situation, you may be required to make a financial contribution to receive a short sale.

A short sale is an alternative to foreclosure and may be an option if:

  • You are ineligible to refinance or modify your mortgage

  • You are facing a long-term hardship

  • You are behind on your mortgage payments

  • You owe more on your home than it's worth

  • You have not been able to sell your home at a price that covers what you still owe on your mortgage

  • You can no longer afford your home and are ready or need to leave

 

What are the benefits of a short sale?

  • Eliminate or reduce your mortgage debt

  • Avoid the negative impact of foreclosure

  • May be eligible for relocation assistance in some cases

  • Start repairing your credit sooner than if you went through a foreclosure

  • May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years)
     

What is the process for a short sale?

If you qualify for this option, the process is similar to a normal real estate sales transaction. You will work with a real estate agent to market and sell your home. However, your mortgage company will also be working with you and your real estate agent every step of the way to:

  • set the sale price (based on current market value),

  • collect financial information and negotiate with other lien holders (i.e., your second mortgage company) if applicable,

  • review acceptable offers,

  • agree to the terms of the sale once a buyer is in place, and

  • work with the buyer’s real estate agent and mortgage lender to finalize the sale.

In some cases, you may be eligible to receive relocation assistance to use toward your moving expenses and to make the transition to new housing easier.

A short sale may take up to 120 days, but this could be shorter or longer depending upon your specific situation.

 

Mortgage Release™ (Deed-in-Lieu of Foreclosure)
 

What is a Mortgage Release?
A Mortgage Release is where you, the homeowner, voluntarily transfer the ownership of your property to the owner of your mortgage in exchange for a release from your mortgage loan and payments. Options are available (sometimes with a relocation incentive) to help you leave the home immediately; stay in the home for up to three months without paying rent; or lease the home (at market rates) for up to one year. Depending on your situation, you may be required to make a financial contribution to receive a mortgage release.

A Mortgage Release is an alternative to foreclosure and should be considered if:

  • You are ineligible to refinance or modify your mortgage

  • You are facing a long-term hardship

  • You are behind on your mortgage payments or will fall behind in the near future

  • You owe more on your home than it’s worth

  • You don’t want to sell your home or haven’t been able to sell your home

  • You can no longer afford your home and you are ready to leave
     

What are the benefits of a Mortgage Release?

  • Eliminate your remaining mortgage debt

  • Avoid the negative impact of a foreclosure

  • May be eligible for relocation assistance in some cases

  • Start repairing your credit sooner than if you went through a foreclosure

  • May be eligible for a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years)

  • Flexible exit options let qualified homeowners (or their tenants) leave the home immediately, or consider other ways to transition out

What is the process for Mortgage Release?

To qualify for Mortgage Release, you’ll work with your mortgage company to:

  • Complete the eligibility process, such as determining the value of the property and how much you still owe as well as reviewing your current hardship

  • Review the options available under Mortgage Release (your mortgage company will help you choose the best option for your situation)

A mortgage release usually takes around 90 days to complete, but this could be shorter or longer depending upon your specific situation.

Your next steps depend on which option you’ve qualified for. These include immediately vacating the home, staying in the home for up to three months (no rent), or leasing the home (paying market-based rent monthly) for up to one year.

Additionally, when you vacate the home at the agreed-upon date, you are required to leave the home—inside and outside—in good condition, free of interior and exterior trash, debris or damage, and all personal belongings must be removed. In some cases, you may be eligible to receive up to $3,000 relocation assistance to use toward your moving expenses and to make the transition to new housing easier.

 

Foreclosure

 

It’s important to know your options and understand all the potential solutions that may be available to help you avoid foreclosure. It’s also important to understand what can happen if you fail to take action and foreclosure becomes unavoidable. The process can be stressful, embarrassing, and it can have long-lasting consequences.

Walking away from your home voluntarily, may seem like the best solution when your home is valued lower than what you owe. However, this action may lead to financial consequences in the future. In some states, you may be required to pay a portion of your mortgage debt even after the home has entered foreclosure. Also, the impact to your credit may make it difficult to rent or purchase a home in the future. It may be best to explore other options to foreclosure with your mortgage company before making a decision to leave your home.

Keep in mind, your mortgage company doesn’t want to foreclose on your home. Just like there are consequences for you, the foreclosure process is time-consuming and expensive for them. They want to work with you to resolve the situation. However, some homeowners simply don’t take advantage of the help available and foreclosure becomes the only option.

 

What is a Foreclosure?

A foreclosure is the legal process where your mortgage company obtains ownership of your home (i.e., repossess the property). A foreclosure occurs when the homeowner has failed to make payments and has defaulted or violated the terms of their mortgage loan.

A foreclosure can usually be avoided—even if you already received a foreclosure notice. See the chart (in "Foreclosure Comparison") to compare some other options: Short Sale and Mortgage Release (Deed-in-Lieu of Foreclosure). No matter the option, you must take action as soon as you can

What are the consequences of a Foreclosure?

  • Eviction from your home—you’ll lose your home and any equity that you may have established

  • Stress and uncertainty of not knowing exactly when you will have to leave your home

  • Damage to your credit—impacting your ability to get new housing, credit, and maybe even potential employment, for many years

  • May owe a deficiency balance after the foreclosure sale

  • Lose any relocation assistance or leasing opportunities that may be available with other options

  • Forfeit ability to get a Fannie Mae mortgage to purchase another home for at least 7 years (Fannie Mae guidelines
     

What is the process for a Foreclosure?

There are two main types of foreclosure:

  • Judicial – supervised by a court with formal legal proceedings (civil law suit)

  • Non-judicial – non-court supervised

In both types of foreclosure, the homeowner receives the legal notice of foreclosure, the legal notice is published in the local paper (in most cases), and the home is sold at public auction. (For judicial foreclosures, you’ll be served with legal notice of the pending action, and the court will approve or set the foreclosure date and sale.)

The process and timing of a foreclosure can vary by state laws, and many other factors. However, your mortgage company can begin preparing the default notice/foreclosure proceedings on your home as early as 60 days after you have missed your first payment. That’s why you should take action early to begin working with your mortgage company to resolve your payment problems immediately.

 

 

How Do You Avoid Foreclosure?
The most important thing—take action now. You have nothing to lose (and everything to gain) by working with your mortgage company to avoid foreclosure.

If foreclosure is imminent, other options may no longer be available. However, you may still be able to leave your home without having to go through foreclosure. This means you won’t have a foreclosure on your credit history and you may qualify for relocation assistance to ease your transition to new housing.