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Could a workout agreement protect a homeowner from foreclosure?

On Behalf of | Jul 30, 2019 | Foreclosure |

For whatever reason — a job loss, an illness or some other calamity — Brownsville homeowners could find themselves struggling financially. It may become a challenge to meet the demands of a mortgage lender during this time. A homeowner may believe that it is possible to bounce back, but whether that can happen before foreclosure proceedings are filed remains a question. 

Approaching a lender right away about financial problems could leave the door open for a workout agreement. Of course, the lender must agree to change the conditions of the loan, which means that both parties need to get something out of the deal. Ostensibly, the lender continues to receive payments and the homeowner gets to continue living in the home.

The lender may agree to waive defaulted payments and renegotiate the terms of the loan to make them easier for the homeowner to meet. This may require lengthy discussions, documentation and other proof. Lenders look at whether to approve workout agreements based on the individual circumstances involved. If a particular Brownsville homeowner can show that a workout would be in the best interests of all parties, it could happen. One of the most difficult parts is often getting the lender to agree to listen.

One reason why a lender may consider this route instead of a foreclosure is the expense and headache of owning a home they do not want. Most lenders would much prefer to receive the money owed to them, or at least most of it. An attorney could review a homeowner’s situation and advise whether pursuing a workout agreement could be the best course of action.