The idea of foreclosure is not only frustrating, but it could also have reverberating repercussions for a long period of time. If a homeowner has missed more than a few mortgage payments on their investment property, there are still options available to possibly avoid foreclosure.
Our Miami foreclosure defense attorneys understand how stressful a foreclosure can be, and are here to help provide insights into investment property foreclosure and the options available to owners.
An investment property is one that is not a primary residence. Usually, it is a property that one buys in order to make a profit or to take advantage of tax benefits. Examples include rental properties, commercial properties, and properties one buys to resell for a profit (often called flipping).
Avoiding a Foreclosure
Below are four options to avoid foreclosure on an investment property.
- Forbearance – A forbearance is an agreement that temporarily reschedules or decreases the mortgage payments during a specific period of time. During the forbearance period, the lender is not permitted to initiate a foreclosure.
- Loan Modification – A loan modification creates a more affordable monthly payment, reduces the interest rate, or extends the amortization schedule. If the loan is through Fannie Mae or Freddie Mac and the owner of the investment property is more than 60 days delinquent on payments, one may qualify for the Flex Modification program. The requirements are quite extensive, so call the loan servicer learn how to apply.
- Deed in Lieu of Foreclosure – A deed in lieu of foreclosure is a transaction where the lender agrees to accept a deed to the property instead of foreclosing. Usually, the borrower is no longer liable for the debt with a deed in lieu of foreclosure. If the property is severely underwater, meaning the value of the property is much less than the amount owed, then a lender might seek a deficiency judgement. The deficiency amount is the difference between the market value of the property and the total debt.
- Sell the Property – Another option to avoid foreclosure is to sell the property in a short sale. Under a short sale, the borrower sells the property for an amount that is less than the debt owed. The lender would then release its lien on the property, and accept the proceeds of the sale as full or partial forgiveness of the debt. If the lender doesn’t forgive the deficiency, a borrower could still be sued for a deficiency judgement after the short sale. It is more common for lenders to seek a deficiency judgements after a short sale of an investment property, rather than a residential property.
Talk To An Expert
Although an investment property is not a primary residence, dealing with a foreclosure can be very difficult. Before considering any of the above options to avoid foreclosure, it is imperative to consult with one of our skilled Miami foreclosure defense attorneys to find out the best option for your situation. Contact the attorneys at Graham Legal, P.A. today for a free, no-obligation consultation!