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HOME
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Foreclosure Bailouts
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Owner
remains in the home |
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- Non-lender Bailouts. Bailout firm offers
to purchase the home by paying off foreclosing lender and giving
additional cash to take care of other problem debt. Home owner
leases the home back, often at a payment lower than the current payment.
Bailout firms advance all the shortfall of the property expenses above the
monthly lease payment. Home owners then have a contractual right to
repurchase the home after their credit is cured.
- Refinance with a "Hard Money Loan" (equity
based). Problematic because of the very high interest rates and high fees
(much larger monthly housing payments), but you stay in the home if you
qualify.
- Negotiate a forbearance agreement with the
current lender. Lenders rarely renegotiate loans but occasionally will
with a requirement for a large lump sum payment toward the back payments
and a much higher monthly payment to catch up. Again you stay in the home.
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Owner leaves the home
- Sale of home and move on to rent
elsewhere. Works if you want to leave the home.
- Home owner looses home to foreclosure sale
and is evicted.
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Obvious and not so obvious
difficulties of Foreclosures. |
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Obvious:
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- Home owner looses their home,
- No place to hang their hat,
- No place to raise the kids,
- Lose of large part of family savings (home
equity).
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Not So Obvious: |
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- Home owner's credit destroyed which is
necessary to rent elsewhere,
- Home owner may not have money necessary to
move or for rent deposits,
- Credit damaged for extended time,
difficult to repurchase new home,
- Often causes a family to break up and
divorce.
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