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Alternatives to foreclosure through workouts with lenders

On Behalf of | May 6, 2021 | Foreclosure Defense |

When people in Florida fall behind on their mortgage payments, they might be in danger of foreclosure. However, there are some potential ways that homeowners might be able to avoid foreclosure, including by discussing alternatives with their lenders. Foreclosures are expensive for banks, making it possible that they might be willing to work with homeowners to resolve the problems rather than foreclosing on the mortgages.

Requesting a workout

A workout involves modifying a mortgage to make it easier for the homeowner to pay when the homeowner has already defaulted or is likely to soon default.

A lender might agree to a workout that does one of the following things:

  • Change an adjustable interest rate to a fixed rate
  • Lengthen the introductory payment or interest rate period
  • Temporarily grant forbearance of up to six months
  • Defer some payments to the end of the loan
  • Lengthen the loan’s term
  • Waive penalties and legal fees
  • Roll the entire arrearage owed into the loan so that it can be paid over a set period of time
  • Agree to a short sale or a deed in lieu of foreclosure

Qualifying for a workout

While it is possible to secure a workout from a lender, there is no guarantee that the request will be approved. People will need to be able to explain the type of financial hardship they have faced and why they expect it to be temporary. They will also need to show that they have taken steps to make their situations better and that they have asked for specific workout solutions. Finally, the homeowners will need to be able to demonstrate that they are financially capable of upholding their agreements if the workout request is granted.

If a lender will not agree to a workout of a borrower’s mortgage, the borrower might want to retain an experienced foreclosure defense attorney as early as possible. A lawyer might be able to negotiate with the lender to secure a resolution short of foreclosure. He or she might also explore other options with the client to prevent foreclosure or to defend against it through the court process.