 Sam
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 Posted: Thu Apr 08, 2004 1:00 am Post subject: How to Avoid Foreclosure through Loan Workout |
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Borrowers in the mortgage industry can avert foreclosure by negotiating with the lender for a new loan - the entire process known as a Loan Workout. Workout includes a bill-repayment or loan-restructuring plan that rolls out the missed payments into a new loan. Borrowers can thus catch up with late payments by increasing the amount of monthly payments (for the next few months) and therefore avoid foreclosure.
In a workout, lenders allow a part of the missed payments, for example, 1/2 or 1/4th of the monthly payments due to be added to the payments for the following months. In case of any job loss or illness, a homeowner is eligible for forbearance, where the lender agrees to suspend monthly payments for a certain period of time, say for 6 to 12 months.
Loan work-out provides various options for taking refinance mortgages without any upfront costs being charged. The lender may often change the term of the loan, so that borrowers can afford the monthly payments. They can also roll the missed payments into the loan balance to make the mortgage current. Whether you go for a repayment or a loan modification plan, you don't have to pay direct fees. But the borrower may have to pay more in interest throughout the loan period.
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