In addition to assisting our clients with bankruptcy and foreclosure defense strategies, we offer debt counseling and debt negotiation services to both assist our clients in bankruptcy and foreclosure matters as well as in an effort to avoid bankruptcy and foreclosure filings when possible.

Once you become a client of Yesner & Boss, P.L. creditors will no longer be allowed to contact you or harass you and doing so would be in violation of the Fair Debt Collection Practices Act which could allow you to recover damages from the creditor. All calls from creditors will be directed directly to our legal staff that will handle and negotiate your file with all of your creditors.

Our successful debt negotiation techniques can save our clients thousands of dollars by often reducing our client’s total debt by 20% - 50%.

Below are some additional techniques we often use to lower our client’s debt, negotiate repayment plans, and avoid foreclosure and bankruptcies.

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure deeds the property back to the lender. In return, the lender will forgive the outstanding mortgage and any arrears owed. This process cancels the impending foreclosure. In order for a lender to accept the deed, many will provide that the borrower already tried to sell the property. Also, the lender should agree to provide a reasonable amount of time for the borrower to find alternative housing. A deed in lieu of foreclosure will not work if there are any other junior liens held on the property. This option will still negatively affect the borrower’s credit score almost as badly as a foreclosure, but it may make it easier to obtain new credit.

Loan Modifications

A loan modification is a tool used to avoid a foreclosure case. When a borrower can no longer afford the payments due under the original loan, the borrower and lender may negotiate to modify the terms of the original loan. If the lender would incur a substantial loss should they proceed with a foreclosure, the lender may be willing to negotiate to modify the loan and sustain a small loss rather than the loss they would incur in the event of a foreclosure. Modification is especially common when the property which secures the loan has decreased in value below the amount that is owed on the mortgage and even after a foreclosure the lender would not recover the full amount owed. A modification is a permanent change in the terms of the loan and usually takes one of four forms:

• Reduction of the Interest Rate
The most common modification negotiated between lenders and borrowers is a reduction in the loans interest rate and/or a conversion of a variable rate loan into a fixed rate loan.

• Extension of the Loan Payment Period
Lenders may allow for a modification which will extend the period over which the principle is repaid in order to lower the monthly payments. Extending the loan payment period results in a total higher interest being paid over the life of the loan, as well as a slower accumulation of equity in the home.

• Re-amortization with Capitalization of Arrears
A lender may allow for missed payments to be added back to the principal amount of the loan. The loan will then be recalculated using the same interest rate and time period as before. This will cause a slight increase in payments, but it will cancel the arrears. If reamortization can be combined with any other forms of loan modification, payments can be reduced considerably.

• Reduction of the Principle Balance
If the loan amount is higher than the value of the property, due to reasons out of the borrower’s control, a lender may consider reducing the principal. They may also reduce the principal amount if they realize that the only other option is foreclosure in which they will obtain the current value of the property minus costs. If the principal is reduced, this will of course lower the payment. Some lenders will choose to lower the principal in the event that they are allowed to keep deferred junior mortgages in the amount of the reduction. This secures the lender in the event that the property goes up in value. These junior mortgages generally only require payment in the event that the property is sold.

Forbearance Plans

A forbearance plan allows the borrower to temporarily reduce or suspend monthly payments until the end of the plan period. At the end of the period, the borrower resumes their regular monthly mortgage payment, as well as making payments to reduce the accumulated debt owed to the lender.

“Short Sale’s” and “Short Refinances”

A short sale is another option to think about in order to avoid foreclosure. This occurs when the property of question is sold for less than the mortgage amount due. A short sale is preferable to a foreclosure because it does not affect the defaulter’s credit score as greatly. The lender will need to approve the short sale. This will most likely be done if there is already a willing buyer, the appraised value is at least 70% of what is owed, and the sale price is about 95% of the appraised value.

A short refinance is similar to a short sale except that the homeowner keeps the home. In a short refinance the homeowner’s lender agrees to take a lesser amount to satisfy the mortgage when a home has decreased in value, however unlike a short sale where the lesser amount is paid by a new buyer, in a short refinance the homeowner finds a new lender that will refinance the loan for the lesser amount, and we will negotiate with the current lender to accept the refinance offer in order to avoid a foreclosure.

Loan Assumptions

A lender may allow for the mortgage to be assumed by a third party. In the event of an assumption, the person receiving the assumed mortgage will take over payments on the property. They will also be responsible to pay back any missed payments prior to the assumption unless a payback plan had already been agreed upon. A mortgage is presumed to be assumable unless stated otherwise in the contract. If the contract has a “due on sale” clause then the loan will be accelerated upon the transfer of the mortgage. However, a lender is not allowed to block assumptions from parents to children regardless of what is stated in the contract.

“Subject To” Sales

A “subject to” sale is another method of transferring a property in order to avoid a foreclosure that is much like a loan assumption. However, in this type of sale the purchaser does not assume the loan, but instead purchases the property subject to the existing loan. Essentially this is a method of assuming non-assumable loans.