The primary responsibility of the listing agent when working with a distressed homeowner is to inform you of your choices. Other types of advice is likely to be needed including financial and legal.
No one should advise you to stop making your mortgage payments.
Here’s some options for distressed borrowers.
If you want to keep your property
- Refinance the loan to lower your payments to something workable
- Seek a Lender Workout. This might be Forbearance or a Loan Modification
If you cannot stay in the property
- Sell the property and bring cash to closing
- Deed-in-lieu of foreclosure
- Short sale
- Foreclosure
Options
- Refinance. The Home Affordable Refinance Program (HARP) expired at the end of 2018, but homeowners who owe more than their homes are worth may have other refi options. … If you’re ineligible for the Fannie or Freddie options, you may still be able to refinance with an FHA Streamline Refinance or a standard refinance.
- Forbearance. If your lender is open to this option they spread out the back payments, fees, and penalties over a fixed number of upcoming payments allowing you time to catch up. NOTE: The CARES Stimulus Bill signed in March 2020 includes liberal forbearance option.
- Loan Modification. Many lenders will work with the borrower to help reduce interest rates, forgive back payments, move payments to the end of the note, or perhaps even re-cast the entire loan to help make the payments affordable.
- Sell and bring cash to closing. If you have the financial ability to pay off your debt, it may be advisable to bring cash to closing rather than take a hit to your credit which will affect your ability to purchase again.
- Deed in lieu of foreclosure. This is unlikely an option for Texas borrowers, but you might want to ask about it. With this idea you give the property back to the lender without them having to foreclose, which saved them money. Always consult with an attorney about this option.
- Short sale. With this option you would list the property for sale, attract a buyer, and negotiate with the lender to accept less than what is owed. Lenders really don’t want to take the property back and would rather accept less that what’s owed. This is what I help Sellers accomplish.
- Foreclosure. If you do not pay your mortgage, the lender will foreclose, take the property, auction the property, and perhaps seek a judgment for any shortfall.
