When a house is scheduled to go into foreclosure, there is usually a notice of default filed by the lender. In most cases, there is usually some reason to believe that there will be no more payments being made by the borrower. That or the borrower is delinquent in making payments because of certain circumstances dictating their financial situation. These scenarios almost always prompt the notice of default to be initiated.
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In Ohio, homeowners may request foreclosure mediation for their foreclosure cases after they have received a foreclosure notice. In foreclosure mediation, a neutral third party mediator helps a borrower and a servicer negotiate in an attempt to resolve a mortgage dispute. Foreclosure mediation is now available in all 88 counties in Ohio. To learn more about the program and whether it is right for you, click here to visit the Supreme Court of Ohio website.
- There are many things you can do to stop a foreclosure in Ohio (when it comes to the timeline issue, we’re looking at 150 days), one of which is a loan modification.
A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.
- A second option is to perform a short sale when you know you are going to come up short on the funds to pay the mortgage payment in full.
That’s where a short sale gets its name from. Even after the house is completely sold, you’ll still have to pay back what is called the deficiency. A deficiency is the amount that is left to pay after the sale proceeds have been turned over to the lender. If a borrower can successfully pay back this amount according to the terms of the new agreement, then the relationship between the borrower and the lender will be saved. No negative credit additions will be made according to the credit bureau, and the ability to buy a new home will be available in 1-3 years after the short sale has ended.
- The third option is to sign a deed in lieu of foreclosure.
This poses a few advantages to the lender and borrower. The borrower doesn’t have to deal with foreclosure or the negative marks on their credit score. They also don’t have to deal with the drop in their credit score. Foreclosures can drop a credit score 200-300 points, catastrophic to the well being of anyone who needs credit to survive.
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