The goal here is to come up with a buying and/or financing strategy that will stop the foreclosure process from proceeding and allow you to retain your home or property.
Foreclosure will typically occur when an existing mortgage lender has not been paid according to the terms of the mortgage and is using their legal right to foreclose on the property in order to get their money back.
In order to stop the foreclosure, the lender will have to be repaid in full or they will have to accept a settlement or less amount in exchange for their release of their mortgage claims.
If there is sufficient equity in the property, a standard private mortgage might be the best option to provide the funds necessary to release the property from foreclosure.
Keep in mind that most private mortgages are only going to be for a period of one year so this is a short term solution to maintain ownership of the property if that’s what you are trying to accomplish.
And one year may be enough time to get your financing back on track and/or credit score repaired to a point where you can once again re-qualify for a lower rate institutional mortgage.
Its not uncommon that life events such as marriage break down, family illness, short unemployment, create circumstances where debt obligations cannot be serviced for a period of time.
Once the situation corrects itself, properly financing can be restored and the private mortgage repaid, effectively stopping the foreclosure action from continuing.
At the same time, the negative situation that caused the foreclosure process may not be rectified in time to refinance the private mortgage and in these situations other considerations need to be made.
First, in some cases, but certainly not all, the private lender may grant an extension of the mortgage for another year. There will typically be a mortgage renewal fee that will need to be paid to extend the mortgage as well.
Second, if the mortgage can’t be renewed, and you still need additional time to get your cash flow and credit in order, then you could apply for another private mortgage from another lender. This will increase your costs somewhat as a new mortgage will need to be registered against the property, but once again, this may be a very economical solution compared to your alternatives.
Third, the private mortgage may have only been taken to stop foreclosure and provide you with adequate time to market the home for resale yourself in order to make sure you could receive the maximum amount of equity in the property from a sale compared to the value destroying process of a foreclosure action.
If there isn’t enough equity in the property to finance a full repayment, or enough for a lender settlement, then there are other strategies you can look at to try and retain your property.
For instance, when there is more than one mortgage in place, but only enough equity to support a mortgage amount sufficient to pay out the first mortgage holder, it may be possible to purchase the first mortgage at face value or even at a discount in order to stop the foreclosure from proceeding. There are a lot of variables and possibilities to this type of strategy and would need to be discussed with an experienced mortgage broker and your legal counsel to a) determine the viability of this type of strategy, and b) decide on the best approach to take.
Another potential strategy is to allow the foreclosure to proceed and try to purchase the property out of foreclosure for a lesser amount through a public bid. At a lower purchase price, you may be able to come up with the amount of cash and private mortgage financing required to complete the transaction.
Once again, there can be different types of strategies to consider. But you should not consider any of them without getting proper legal advise and professional private mortgage advise from an experienced mortgage broker.
If you are in need of a stop foreclosure mortgage and would like to discuss what type of private mortgage financing may be available to you, I suggest that you give me a call so I can quickly assess your situation and provide some relevant options for your immediate consideration.