Question

Paul owns his own home, which is financed with Green Forest Home Loans. Paul has been paying his mortgage for four years but is concerned about his ability to continue making payments as he has recently lost his job. Paul wants to avoid a foreclosure and knows his house has appreciated significantly in value in the past couple years, but ideally would like to keep his home rather than selling it. Paul has no idea when he will get a new job but is optimistic it would be within the next three months. Although several of the following options may be available to Paul, which one is most ideal?

a. Workout Agreement.
b. Short Sale.
c. Default.
d. Forbearance.

Answer 1

The best option for Paul, who wants to keep his home and is optimistic about finding a job soon, is option d. forbearance, as it allows temporary suspension of mortgage payments without risking foreclosure.

Step-by-step explanation:

Paul is facing a situation where he's unsure about his ability to continue with his mortgage payments due to the loss of his job. Considering his optimism about finding new employment within the next three months and his desire to keep his home, the most ideal option for him is d. Forbearance. A forbearance agreement allows Paul to temporarily reduce or suspend mortgage payments while he gets back on his feet financially. Since his house has also appreciated in value, this option helps him retain his equity and prevent foreclosure. Other options like a Workout Agreement could be considered if forbearance isn't sufficient, while a Short Sale and Default would be less ideal and could lead to losing the house.