As the real estate market declines with the rest of the economy, more and more families like yours find themselves facing foreclosure. The Michigan foreclosure process is a very complex and expensive process for lenders; in an attempt to stem of the flow of funds lost during foreclosure, many lenders say they are offering solutions, usually in the form of a loan modification or a plan to repay the amount past due (in arrears).
I just wanted to take a moment to talk a little bit about repayment plans. Often the plans offered by lenders require a considerable amount of money due immediately (we’re talking thousands of dollars). Most homeowners find themselves in a default situation because of a financial hardship, resulting in a loss of liquid assets, or cash on hand. This makes a large initial payment all but impossible.
Also, most repayment plans consist of fractionalizing the amount in arrears, and adding that smaller amount onto the monthly payments. For example, if a your mortgage payment is $1000/month, and your are two months behind, the amount in arrears would be $2000, plus any penalties or late fees. A lender may then offer a repayment plan that requires $200 down initially, adding $200 to the payments for the next nine months, making those payments now $1200.
If you are in a temporary financial hardship, this may be a viable solution. However, if you find yourself in an ongoing hardship, this option is likely not be feasible.
If you find yourself in a similar situation, give us a call to discuss what your other options may be at this point to get you back to better times as fast as possible.
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