How to Avoid Investment Property Foreclosure

Avoiding foreclosure

Many people have turned to owning investment property as a means of income. When unforeseen economic problems hit, it can have a major impact on an investment property owner. As with any property facing foreclosure, it is important to act quickly and not let the situation get out of hand.

Things You'll Need

• Telephone
• Loan information
• Computer

Instructions

1. Get foreclosure counseling first to determine your options. There are government-funded programs that offer foreclosure counseling for property owners. Also, an attorney will be able to help counsel you on your options when facing foreclosure on investment property.

2. Next, contact the mortgage company that holds the note on your property. The company may be able to offer an option to help defer your loan and allow you to keep your investment property.

3. If the mortgage company is unable to defer your payment, refinance the property at a lower rate or request a loan modification. Since most investment loans are at a high interest rate, this can help lower your monthly payment and prevent foreclosure. A loan modification will not include the closing costs associated with refinancing.

4. Sell the property if there is no way to refinance. If you see you can not hold onto your investment property and want to try to protect your assets, contact a professional who can help you sell your property. A Realtor will be able to offer marketing strategies to help your property sell faster.

5. If you must, do a short sale on your investment property. This means selling for an amount less than your total mortgage that the mortgage company agrees to accept as payment for the property. Call the mortgage company and ask if this is an option.

6. Offer to deed the property back to your lender as a last option. A Deed-in-lieu of Foreclosure can be done to give the property back and take less of a hit to your credit. You will still be giving up the property, but may be able to re-establish and rebuild your credit more quickly.

Tips & Warnings

• Get counseling as soon as you realize there is a problem.

• Contact a professional to assist you in the sale of the property.

• Keep all of your mortgage information together. Always write down the name of the person you speak to at the loan company.

References

• U.S. Department of Housing: Appproved Housing Counseling Agencies
• Real Estate Investment 101: How to Avoid Foreclosure