Avoiding Foreclosure - There are several reasons peoples homes end up in foreclosure every year. There are certain things that you can do before you your home goes into foreclosure.
The main way to avoid foreclosure is to make sure you make your payments. If you are having a hard time making your payments on time, you have several options. Look into refinancing, borrow the money from a friend or family member, or contact your lender and see if they will be willing to work anything out with you, are a few options you have to start with.
Be very careful if you are approached by a foreclosure bailout company. These companies will usually offer to buy the house from you and lease it back with the option to buy it back. In reality they usually will end up taking your home and evicting you in the process.
You should always try work with your current lender to resolve hardships. Many lenders today are quick to pull the trigger on foreclosures. Often times this is due to borrower not trying to work with the lender. You do have rights if you are having problems.
A forced sale of your property can also be pressed by unpaid property taxes or by liens.
DO NOT IGNORE THE LETTERS FROM YOUR MORTGAGE COMPANY. If you are having problems making your payments, contact your mortgage company immediately. Explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help. Stay in your home for now. You may not qualify for assistance if you abandon your property.
As a last resort, you may be able to voluntarily "give back" your property to the mortgage company. This won't save your house, but it will help your chances of getting another mortgage loan in the future.
If you are in foreclosure, there are instances when a lender will refinance your loan and payoff the loan that is in default. The best thing to do if you are considering this option is to contact a local mortgage broker. They will be able to speak with you about your particular situation and tell you if there are any lenders who can help you. This won't change the fact that you'll have a mortgage on your credit report that will show as a foreclosure (although it will be paid off by the new loan), but at least you may be able to save your home. Also, expect to pay a much higher interest rate for your loan. Once you have a property go into foreclosure, you are considered a very high risk to a lender, and they will price the loan accordingly.
Usually these foreclosure "bailout" programs have loan amounts available up to 70% of the homes value. There may be a few exceptions.
Foreclosure buyout mortgages are one of the hardest loans to place, but with this loan the foreclosing lender is paid off and a new loan is created.
A Broker Price Opinion, or BPO may be required in addition to an appraisal in order to secure a foreclosure refinance.
When all else fails, selling your home may be a viable option in avoiding foreclosure. This should be your last resort, however.
If you want a foreclosure bailout mortgage, make sure you communicate with your lender. You first must determine who handles "foreclosure" or loan workouts at your current lender. Send all communication certified mail or if sending a ., call to confirm they got your .. Once your lender feels your are trying, and you have documentation, they are required by law to work with you on a refinance. Work with a lender that understands the process since time is not on your side.
Many homeowners have used a BK 13 to save their homes. This move does do serious damage to the credit but in the end the goal is to save the house. Credit can be rebuilt. If considering a BK its important to have a good BK attorney and be working with a mortgage professional who specializes in BK loans.
For those unlucky enough to default on their mortgage repayments, foreclosure can be a drawn out and traumatic affair. Once a loan secured on a property goes into default for more than three months, the lender can start trying to sell the property to recover the outstanding debt. The selling process typically takes 12 to 18 months from the date when the notice of default was filed.
How do I stop foreclosure? - There are programs available to help stop foreclosure regardless of your credit situation. Time is critical and you MUST act fast to stop foreclosure.
A sale-leaseback may be an alternative if you do not have quite enough equity to refinance.
Before your house can be foreclosed on, a notice of default must be sent to you. This is a notice that demands back payments are brought current. If the payments are not made current within the time given, the lender will begin the foreclosure process. We have programs available to help stop the foreclosure.
Before foreclosure proceedings begin on your house you must get in touch with a mortgage broker to expedite your available options before you lose your house. There are lenders out there that will do foreclosure bailouts so long as a Notice of Default is not filed on the property. Refinancing the property if there is equity is a much better alternative to foreclosure. You can also sell your property and not have the foreclosure hit your credit report.
If you feel that your situation will not improve in the immediate future you should consider selling your home while there is still time. By selling your home you get to keep most of the equity you have built. Depending on how far into the process of foreclosure you are you may have to talk to your current mortgage company about doing a short sell. If this is the case you should contact a Realtor in your area that specializes in listing distressed properties.
When you contact your mortgage servicer, you can try to work out a payment plan to bring your back payments current. Not all mortgage servicers are willing to work this out with you, but there is a chance that they may. They do not want to foreclose on your home because that means that they will lose money in the long run.
Homeowners can file a Chapter 13 which will enable them to pay back their arrearage over time. This option works best when the cause of the late payments was temporary and the borrower can now afford to pay the regular payment.
The foreclosure process is a very stressful and time sensitive issue. But you do have options. There are hard money loans to help you catch up but there are also options you can work out with your current lender.
Reinstatement-This is the amount that you have to pay to your mortgage company in order to bring your loan current. Your loan delinquency will be taken into account, as well as other unpaid fees and costs associated with your loan. (You can look into getting a hard money loan to do this)
Forbearance -During what is called the forbearance period, the lender agrees to accept less than the full amount for a temporary period. This happens only if you show the bank or the mortgage company that you have sources for funds that can let you bring the mortgage current at a future date. (Usually you have to be a couple payments behind for them to approve you for this)
Note Modification -Although you are unable to settle your previous accounts, the lender might agree to modify your mortgage if you make your regular payment now. (Often requires supervisor approval)
Repayment Plan -A repayment plan allows you to repay the amount you owe within a fixed period of time, in which your unsettled dues will be combined with your regular monthly payment. (Hard to do in tough times, but they may allow you to skip a payment or 2 with the understanding you will pay your regular payment plus a quarter of what you missed)
Short Sale - The lender will allow you to sell your home, even at a loss to them. So if you don't have enough equity to pay prepays and commissions this may be an option to you. Make sure you work with a realtor that specializes in selling distressed properties.
Deed in Lieu of Foreclosure -In a deed in lieu of foreclosure, the lender agrees to release the debtor from any liability on the loan itself. This agreement is usually reached only when the debtor transfers his or her property to the name of the lender.
A private loan from a friend or family member could be a last resort to save your home from foreclosure.
Remember, if you are in danger of foreclosure, you are past due and need help, there are options available to you, but you must act quickly. When you are facing a foreclosure, you are not only in danger of losing your home- you are in danger of doing severe damage to your credit score that will be very hard to repair.
Before you consider a short sale or Deed in Lieu, determine how much equity you have in the property. Think about how much you owe on your mortgage, and then divide that number by how much you think the home is worth. If your mortgage balance on your 1st mortgage is less than 70% of the value of your home, you might be able to save your home through a foreclosure refinance.
One way to stop a foreclsoure is to make up all the back payments. There are various ways, but the best options is to speak to a lender representative. The representative will be able to guide you and help you on stopping the foreclosure.
Foreclosure Prevention - A forbearance agreement is one way to prevent foreclosure. A forebearance agreement is an arrangement to postpone a borrower’s monthly payment for a limited and specified time period. The loan
continues to accrue interest during a forbearance. A forbearance request must be approved by your lender. Most lenders are willing to enter into such an agreement if the borrower can pay at least 50% of the mortgage arrearage or 1 full months payment and is willing to pay the remainder in 24 months.
Preventing a foreclosure is a bit like curing an illness, you have a better chance of beating it if you catch it early
Some lenders will allow you to 'sell' your property to a family member as a way of avoiding foreclosure.
When times get rough and a foreclosure is on the horizon, other drastic measures might have to be taken. If there is plenty of equity within the home, a refinance could be done to pay back the amount due, and in certain circumstances allow you to pay off other debt.
If you refinance your home you will typically be looking at paying a very high interest rate, but in many cases it is worth the sacrifice to save the equity in your home.
Sometimes, a homeowner is left with no other choice than to sell their home. It's usually a better alternative than letting the house go into foreclosure, because a foreclosure on your credit report is very damaging. If you can find a buyer to "bail you out", it can save your credit rating to some extent.
Lenders are required by law to work with you and try to approve forebearance agreement. Make sure you are talking to the correct person that handles forebearances and communicate everythng in writing. You have more time than you think and even if you get a court sale date on your home, you can get this extended two times before your home is sold at the auction.
If you make all of your payments on time and keep an accurate balance and budget, foreclosure can be prevented
Homeowners have in the past used chapter 13 as a way to prevent forclosure. There are also private investors that will lend the money if needed. The most important thing you need when trying to prevent forclosure is a good mortgage professional.