How To Deal With The Foreclosure Demon
How do I stop foreclosure is a common question asked by
thousands of homeowners seeking relief from the burden of
having too much mortgage and not enough money. Housing
counseling agencies have more work than they can handle
while foreclosure notice sale signs continue to add to the
workload.
Home owners in trouble have to fend for themselves and work
through a maze that they are ill prepared to deal with. The
availability of credible information is a precious commodity
in the present mortgage mess.
Here are some steps to take that may help.
(1) Begin with the proper mindset. Don't panic. Understand
that mortgage lenders do not want the property back. They
are in the lending business not the real estate business. If
they foreclose they are subjected to negative consequences
like having to hold the property in their inventory and pay
maintenance and management fees. This lessens the amount of
money they can lend out.
(2) Gather your loan documents and review them carefully,
especially the mortgage contract and the note. You'd be
surprised how often the lender has not complied with some
provision of the contract. This could be a defense that you
use to stop the foreclosure and give you the ability to
negotiate better terms with the bank. You should seek the
advice of a competent attorney if you feel the lender has
not kept its side of the bargain.
(3) If you or someone one the title is a soldier or sailor
you may be entitled to stop the foreclosure entirely. Under
the Soldiers and Sailor's Civil Relief Act, lenders may be
stopped from foreclosing on a home owned by an active member
of the armed forces. There are some exceptions, but this is
a powerful weapon to use if it applies to you.
(4) Determine whether renting or continuing to make a
mortgage payment is the best route for you. You can obtain
help with this decision by contacting a local housing
counseling agency in your area that assists with foreclosure
counseling. They can be found at
http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. Just click
on your state and local links inside the website.
(5) Know your options and be prepared to use them. It is not
possible to go into depth with all the options available in
this article. You can get more detailed information on these
options by contacting a local housing counseling agency or
contact the author of this article via the information
provided at the end of this article.
* Modification - this option can be used to modify your
present loan payments to an amount you can afford to pay.
Usually the loan term is increased a few years allowing more
time to repay the loan with a lower monthly payment amount
* Forbearance agreement. The lender will agree to stop
payments for a few months until your financial circumstances
are better. The payments that are not made during this
period of time are tacked on to the back end of the mortgage
loan
* Refinance. If you have a lot of equity in the property and
have had a good payment record with the lender, the lender
may refinance the property to a lower interest rate or a
fixed rate for a longer time period, which could lower your
monthly payment
* Offer a deed in lieu of foreclosure. Here you just sign
the deed over to the bank and walk away. You've avoided a
foreclosure being on your record. Be sure to get in writing
that the bank will not seek to obtain any additional
expenses or payments from you should you take this avenue.
* Sell the property through a short sale. You can sell your
property, even for less than what its worth, through this
process as long as the bank agrees. If you have a buyer
willing to buy your property and the bank approves the sale
this will avoid a foreclosure. You will not be subject to
any penalty for any difference between the mortgage amount
and the selling amount.
* File for bankruptcy. This should be a last resort measure.
A chapter 13 bankruptcy filing stops a foreclosure
immediately. It will give you time to work out a possible
payment plan to save your home if that is your goal.
* Allow the foreclosure to proceed. This is the very last
choice. In some states you may be subject to what is called
a deficiency judgment, which means you will have to pay the
lender the difference between what it obtained from the sale
of the property and what was owed. Seek the advice of an
attorney or local housing counselor before you take this
action.
Roy Landers, attorney and real estate broker/investor
teaches what's working and making money in the current real
estate market with FREE content from The Real Estate
Playbook, the place where savvy home buyers, sellers and
investors gather information to build a solid financial
foundation. He also provides a fix foreclosure publication.
Website: http://www.thehomebuyersource.com/foreclosurehelp
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