For homeowners facing foreclosure, understanding the process of foreclosure and the options they have to stop missed payments from leading to foreclosure is important. If a homeowner can get together with his or her mortgage lender early on, and the mortgage lender is willing to work with the homeowner, the lender may offer the homeowner mortgage deferment. This can buy the homeowner some much needed time to get his or her finances together, especially after an emergency.
A deferment for mortgage purposes is a period of time during which the homeowner does not make payments on the mortgage loan. A deferment is similar to mortgage forbearance, although some forbearance terms include lowering the payment due instead of suspending it entirely. During the period that payments are suspended, the homeowner may be able to recover financially and continue making payments when the regular payments resume.
Deferment is generally not to be used by homeowners who are dealing with long term financial shortfalls. This is because deferment only temporarily stops payments; the missed payments are still owed by the homeowner. Deferment does not forgive any part of the homeowner’s financial obligations, it just postpones them. When the deferment period ends, the homeowner may be required to make a lump sum payment to cover the missed payments, or the past payments may be added onto the future mortgage payments. The homeowner may work out a deal with the mortgage lender to get a break on the interest during that time, and have the interest added onto the principal.
Whether a homeowner qualifies for deferment depends on the mortgage lender. The lender may limit deferment to homeowners who are in their primary residences and not paying a mortgage on a second home. In addition, the homeowner may be subject to restrictions on selling the home or moving out during the deferment period. This does not mean that the homeowner cannot use this time to make plans to move out or sell the home after the deferment period if his or her financial outlook does not improve.
Homeowners should also be aware that they can seek deferment for property taxes. Missed property tax payments can lead to foreclosure, and if a homeowner is experiencing a temporary difficulty, he or she can apply for property tax deferment. Homeowners have to meet eligibility requirements that include income limits. Generally, if a homeowner who is granted a deferment makes payments according to the deferment timeline, the deferment does not come with additional costs. However, if the homeowner misses payments, there may be additional costs for interest and fees.
When negotiating with a mortgage lender for deferment and other loss mitigation programs, it is best to work with an experienced attorney in order to ensure that you are agreeing to the best terms for you and not setting yourself up for future problems.
Contact an Experienced Attorney
If you are facing foreclosure and want to find out more information on deferment, forbearance, and valid defense to foreclosure on your home, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible foreclosure defenses and different alternatives to avoid foreclosure.
(image courtesy of Age Barros)