Refinancing to Stop Foreclosure

Refinancing May in Appropriate Circumstances Be Obtained to Prevent Foreclosure.

Where there is equity in the property, a refinancing may resolve a client’s hardship.

Although it is difficult to consider refinancing as an option at the time of a foreclosure action, it is not impossible. To refinance a property out of foreclosure, it is necessary to have significant equity in the property and income to sustain regular mortgage payments despite past mortgage arrears. When the real estate market was healthier prior to 2008, refinancing out of foreclosure was much more common, because many homes in foreclosure, despite mortgage arrears still had equity. Often, shortly prior to a foreclosure sale, a homeowner would be able to secure high interest refinancing to stop the foreclosure. After making a year’s worth or  payments, on the high interest rate mortgage the home owner would usually be able to secure a lower rate or refinance again to a lower rate. Another way refinancing was obtained was if a homeowner showed that it was able to stay current in chapter 13 for a year with post-petition mortgage payments and Chapter 13 plan payments; such current payments for a year where considered necessary proof to lenders, potentially willing to refinance, that the homeowner had sufficient income to sustain a new refinancing. However, because in the present economic climate, due to lower real estate values and longer periods of foreclosure, the average house in foreclosure at the present time is “upside down” with the value of the home often less than the mortgage payoff amount. Therefore, it is now much harder to refinance out of foreclosure, although in appropriate situations, such as in conjunction with the filing of a Chapter 13 case, it may be possible to consider the benefits of refinancing. The Law Firm of Ronald D. Weiss, P.C. can

Because this option requires time and is often difficult in a foreclosure situation, it needs to be pursued in conjunction with other foreclosure defense strategies which can give the client more time in the foreclosure process. explore this option with you, discuss how to rebuild your credit to obtain such a loan and in appropriate situations, recommend financial professionals who specialize in refinancing under these circumstances.

Please call us at (631) 271-3737, or e-mail us at weiss@ny-bankruptcy.com for a free consultation to discuss such refinancing options in greater detail.