Debt Management is learning to live on a budget day by day, no matter the cause of your debt. Debt management plans help people decrease and eliminate debt. The plans work best with “unsecured debt,” or debts such as credit cards, bank overdrafts and personal loans. “Secured debt,” such as mortgages, rent and utility debts, cannot be included in a debt management plan.
Debt management plans are necessary if you have too much debt. If you cannot meet your monthly payments, your creditors will record it on your credit history, which may lower your credit score, decrease your ability to find a new loan or take out new credit cards, and increase your interest rate.
Credit Repair is the process of working with credit bureaus and creditors to improve a person’s credit report as a way of increasing their FICO credit score. These steps usually include examining all the debt that a person has acquired and then devising a plan to reduce or eliminate the debt. Credit repair is especially important to people that are trying to receive better credit options including competitive interest rates. The objective with permanent credit repair is to remove all negative items reflecting so that only positive accounts remain on your credit profile. Every negative item removed can improve your score from 5 to 25 points which in turn will help you qualify for lower interest rates, larger loan amounts, and lower down payments on future loans.
A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure.
Another benefit to the borrower is that it hurts his/her credit less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy.
Loss mitigation is the process by which banks try to minimize their losses when it comes to non-performing investments, and in recent times, especially with those associated with mortgages and mortgage backed securities. This is the process banks use to negotiate a loan modification, repayment plan, restructure a home loan, loan forbearance, Deed In Lieu of Foreclosure, Loan Repayment Plans, Short Sales, or Cash for keys. All of these practices fall under loss mitigation services.
Restructured loans are those loans whose terms have been modified, because of a deterioration in the financial condition of the borrower, to provide for a reduction of either interest or principal or any part of the original terms of the loan. Once an obligation has been restructured because of such credit problems, it continues to be considered restructured until paid in full or, if the obligation yields a market rate, until the year subsequent to the year in which the restructuring takes place.
Though some foreclosure mitigation programs existed already, the majority of current programs came into being as a result of the housing crisis in 2007. The sudden explosion of the number of homes in and nearing foreclosure directly led to drastic falls in the value of real estate and the number of construction jobs. This situation played a major role in the greater economic downturn that affected the global economy.
The U.S. government, along with some state governments, responded by creating foreclosure mitigation programs.The primary method of foreclosure mitigation is to help homeowners figure out a viable way by which they can continue to make payments on their mortgage in their current financial situation. This may mean laying out a careful budget or finding unnecessary expenses that can be cut.
When simple budgetary solutions prove unsuccessful, foreclosure mitigation specialists can help by negotiating with lenders to take advantage of programs which the banks may offer. If a borrower reached the point of judicial conferences regarding their property, foreclosure mitigation will allow legal representation in the court room to assist on working out terms for the homeowner.
If you have missed payments on your mortgage, then you know that the lender will be asking you to pay all the past due amounts plus penalties. If all that money is not paid in full, then foreclosure may be forthcoming.
At this point, paying a lump sum of all the delinquent mortgage payments is just not financially possible. A repayment plan will let you repay part of the delinquency each month, along with your regular monthly installment.
An option you might want to consider as a way to prevent foreclosure is a mortgage forbearance. It’s commonly used for temporary financial bearing situations such as short periods of unemployment or poor health. In the simplest of terms, mortgage forbearance enables you to temporarily stop making your mortgage payments.
As for mortgage rates and interest, they continue to accumulate on the mortgage forbearance and is added to the remaining balance of the loan. You are generally also asked to sign a forbearance agreement that states when the lender will require you to pay the amount you owe. Once the forbearance period comes to an end, you are once again obliged to make full payments on your home loan.
While mortgage forbearance may only serve as temporary fix, it does buy you some time to overcome your financial state, and is a far better option than loosing the home you worked so hard to purchase.
A short sale is an offer to buy a home for less then what is owed. In a short sale, the owners have to accept the offer . An arrangement is made with the mortgage company to sell the home for less than they owe.
Cash for keys is a way for homeowners in foreclosure — or for tenants who are victims of foreclosure — to receive cash in exchange for surrendering the keys and vacating. Banks generally reach an agreement with the occupants of a foreclosed home, which stipulates the home will be left in good condition and cleaned. The agreements typically set forth a specific date that the home will be left vacant, including a promise from the occupants that they will not Vandalize the foreclosed-upon home.
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one who cannot repay the debts they owe to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor.
Bankruptcy is not the only legal status that an insolvent person or organisation may have, and the term bankruptcy is therefore not the same as insolvency. In the United States the term bankruptcy is applied more broadly to formal insolvency proceedings.
Debt Settlement is the action or negotiation made on behalf of a consumer with that consumer’s creditors for the purpose of the creditor forgiving part or the entire principal of the debt incurred or credit extended to that consumer. The term debt settlement shall not include any action taken to convince a creditor to waive any fees or charges. It is also known as debt arbitration, debt negotiation or credit settlement. The debts such as credit card debts, other unsecured credit card debts, medical bills, gas/store card debts, and personal loans can also be settled by way of debt settlement. However, tax debts, alimony, child support, mortgages, car loans, and federal student loans cannot be settled in a debt settlement program.
A securitization audit is an audit done by a third party researcher who scours through EDGAR (the SEC’s database for all public placements) as well as recorded documents and your note looking to find proof that your loan was securitized. And under some circumstances a well trained auditor can actually pinpoint the actual location of your loan among hundreds of thousands of investments. This is tedious and grueling work, as they have to literally find a needle in a haystack of a few thousand loans.
At the end of a securitization audit, a securitization auditor provides a multi page document and an affidavit that is admissible in court as evidence. The document will show whether your loan was securitized and in some circumstance what pool your loan is in, or what Remic it belongs to.
Since this information is publicly available through the SEC, the affidavit is a simple statement of fact (given with firsthand knowledge) that backs up the fact that the loan has, in fact, been securitized. Securitization audits are used to see if the lender has violated any federal or state laws.