What's a Borrower To Do?
by Dean Eades

San Diego California - The recent turn down of the real estate industry in some parts of the country including San Diego, may find you wondering where you stand with your borrower. You must know your rights and understand you have options early on! Here is an explanation of what you, as the borrower need to know.

The first choice a borrower should consider is to call the lending company on the telephone. Avoiding them is not the answer.

Forbearance - This plan allows the borrower to continue not paying the mortgage for an agreed upon time, say, 6 months. Once you can make payments again, the total of the missed payments are divided and added on to your monthly payments.

It may also be a possibility to re-write the loan to a more affordable monthly amount. When calling the lender and explaining you have a hefty hardship right now, they can sometimes put the missed payments on the back end of the loan and start you on the next month making regular payments. But you won't know unless you call them!Past the Point of No Return

A Short Sale is the lender selling your home for the highest amount they can get and forgiving you the remainder of the loan with no ability to later sue you for the lost amount....almost. The lender can still send you a 1099 for the amount of the loan that wasn't paid but the IRS will no longer consider it income thanks to the bill President Bush signed; HR 3648 Mortgage Forgiveness Debt Relief Act of 2007 (pdf file) which provides relief to the homeowner and the phantom income. The relief comes on your credit report which will show the debt settled for less then the original amount and not as a foreclosure.

A deed in lieu of foreclosure is a popular choice for lenders if the home they are receiving will most likely be sold for or above the amount of the loan. This works in a good real estate market. It is a very good idea to consult a real estate attorney as some of the fine print might continue to give the lender the right to sue you for breach of contract!

FINAL NOTE:You may have options you are not aware of. It is always a good idea to consult an attorney that is familiar with real estate law and the foreclosure process.