
Understanding the different options a seller may be considering is important when negotiating. Here are 10 of the most common options for sellers in default or anticipating being in default.
1. Reinstatement of Loan (Cure): Paying the lender everything that is owed in one lump sum including missed payments, any late fees associated with these payments, foreclosure fees, legal fees and the principal owed during the delinquency. A cure may involve the seller curing or deeding it to the investor “subject to” the existing loans, and the investor will then cure. Risk to the seller includes that the lender may accelerate the loan because of the due-on-sale clause, the seller no longer owns the property and the seller has no recourse if the investor doesn’t pay the loans.
2. Repayment Plan: A written agreement between the lender and the homeowner. These plans require higher payments than the regular monthly mortgage amount for a period of time until the loan is brought up-to-date.
3. Loan Modification: Involves changing one or more terms of a mortgage. Modifications may be considered to reduce the interest rate of the mortgage, change the mortgage product (i.e., from an adjustable rate to a fixed rate), extend the term of the mortgage or capitalize delinquent payments (add delinquent payments to the mortgage balance-only available in extreme hardship situations). Modifications are NOT easily granted and there must be strong, justifiable reasons for the request.





























