Foreclosure Alternatives to Relieve Maryland Homeowners` Fears

By: Sarah Carlye

Foreclosures are on the rise and it is getting worse everyday. Many decent people are in this terrible situation and because they have never dealt with foreclosure before, they are completely out of their element. Homeowners are scared and don`t know where to turn. These are many options and alternatives to avoid for foreclosure that homeowners should absolutely be aware of.

Loan Modification

This is a step that can be taken by those who have adjustable-rate loans. Because of the failing economy, most homeowners with adjustable-rate loans are grimly watching their rates go higher and higher. This is one of the many tactics that the mortgage companies use to stay afloat. Unfortunately, it can easily put homeowners into foreclosure. Loan modification is an option, however the mortgage companies will avoid you like the plague if you try mentioning this to them. Most likely, you will need a specialty lawyer in order to put the modification through before you get foreclosed.

Mortgage Restructuring

Mortgage restructuring is done through the lender that holds your mortgage at the bank. In order to qualify, you must prove that you are seriously worried about falling behind. This has to do with constant and immediate communication. If the lender sees that you did not contact your mortgage company at the very first sign of trouble, they most likely will not accept you. If the lender decides that you are accepted, he/she will work with you and try to add the amount past due to the end of your current mortgage without extra interest. If during this process you keep falling behind, the lenders will work with you to find other solutions such as re-extending your mortgage, as long as you contact them right away.


Refinancing happens when you take out a new loan in order to pay off your current loan. The new loan is usually the same amount of money as the old loan, so depending on how much of your mortgage is paid off, you may get a large amount of upfront cash. Fortunately you could have much lower payments. However you need to keep in mind that it is like starting all over again and could potentially add many more years of payments. Also pay close attention to interest rate terms, fees, and closing costs.

Short-Sale Negotiation

This step is primarily used to directly avoid forclosure. Basically, you would have to sell your house for much less than it`s original worth and much less than the original mortgage. After the house is sold, you can propose the sale to the mortgage lender in hopes that they will discount the outstanding balance of the loan due to financial hardships. If the lender approves the sale, you will hand them over all of the proceeds. However, there still could be a balance owed to the lender, which the you would personally be responsible for. This happens in most short sale cases. If the lender disapproves the sale, the house will most likely go into foreclosure.

Short-Refinance Negotiation

This is a short-sale negotiation combined with refinancing. If you are approved by the lender, the lender will accept a short payoff so that you can refinance. So instead of the homeowner selling the house, they refinance in order to receive another loan. Lenders are accepting short-refinance negotiations more and more due to the plummeting of house value.

Deed In Lieu of Foreclosure

This is deed in which a you would literally have to hand over your property to the lender because you can no longer pay on it. The lender will in turn sell the property in order to reimburst themselves for your original loan. Like Short-Sale Negotiation, this is used to avoid forclosure. In order to use this deed, the you may be required to pay deed tax. This is because a transfer of property is taking place.

Loss Mitigation

This is sort of like company or division that plays referee between the you and the mortgage company. They will explain to you all of your options (basically every option mentioned above) to prevent forclosure. This will in turn benefit the mortgage company because the loss mitigation team are working with the debtor on making timely payments.

Government Foreclosure Prevention

This is an act that former President Bush put into action last year. It`s goal to help homeowners gain more affordable and reasonable mortgage terms, and the funding is taken out of the national budget. President Obama is now in the process of refining this plan. If his proposal goes through, over $75 billion will be dedicated to struggling homeowners.


Foreclosure is scary, but there are ways to prevent it. If you are looking forclosure in the face, you need to be aware of and consider all of your options.

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