News & Events

LIVING THROUGH FORECLOSURE
By: Brian P. Hayes

This is the second edition of our look at living through foreclosure. In this segment we will consider negotiating with the homeowner's lender as a means to stopping a foreclosure. Lenders are in the "lending business," and seldom wish to venture into acquiring real estate (that is, completing foreclosures) if avoidable. Occasionally a "forbearance agreement" will be offered which will allow the arrearage on the mortgage and foreclosure costs to be re-paid to the lender. After completion of the forebearance agreement terms, normal monthly payments can resume.

The problem with forebearance agreements is that they typically will require repayment of the deficiency amounts and costs over a few weeks, or at most a few or several months. Obviously, if the borrower had the money to pay then, they wouldn't be behind in the first place. If the forebearance agreement fails, the homeowner is often only a few weeks or months "better off," and usually a few thousand dollars "poorer." In a couple of situations we are aware of the lender never dismissed the foreclosure proceedings, so when the homeowner defaulted on the forebearance agreement the ensuing sale required only 20 days notice. In other cases, homeowners have used IRA or 401k funds, which resulted in both a heavy tax burden and depleted assets the homeowner could have protected.

Despite the possible pit-falls, forbearance agreements are certainly one possible solution. Negotiating forbearance agreements can be complicated, and is not a process borrowers should undertake ill advisedly. If you or someone you know is threatened by a foreclosure, our office may be able to help. We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting them with the filing of petitions for relief under the United States Bankruptcy Code. If you believe you may need to consider a Bankruptcy, please call to set an appointment. Our initial consultation is free, and in many cases our fees can be paid through the Chapter 13 plan.