If you missed your mortgage payments each month, your mortgage lender or bank have the right to repossess your home. Generally, it cannot be considered your home until the mortgage is paid off in full. Until such time, you and the bank own the property. So if you’re not able to make payments on time, the bank will probably come knocking at your door. This is something you don’t want to happen. Home foreclosure can lead to loss of your home. Moreover, your credit will also get affected or drop your score due to the impact of foreclosure.
Foreclosure in unavoidable. Even if your mortgage lender or bank has filed a legal proceeding to take your home, you can still do something about it until the auction occurs. In some cases, you can still work out foreclosure for weeks or months, during these time, you can keep living in your home temporarily. The question is, will you be able to stop foreclosure completely? Yes, you can stop foreclosure and keep your home if you will continue making payments on the mortgage. To better understand what foreclosure is, let’s define it.
What is foreclosure?
Home foreclosure authorizes the lender or bank which holds the lien to your assets to reclaim ownership of the said property by selling it and repaying the mortgage debt. Foreclosure proceedings can be done after the debtor missed several payments on the mortgage while the state laws control the right process which the lender must follow.
What are The Reasons for Pending Foreclosure?
There are different reasons why foreclosure happens aside from those who engaged in mortgage fraud. Most homeowners face the following circumstances that lead them to stop paying a mortgage payment in a timely manner:
- Unexpected job loss
- Death in the family
- Demoted at work, promotion-removal or promotion denial
- Medical condition
- Loss of second income
- Unexpected home maintenance or other expenses
- Too much debt
- Unable to pay high-interest rates
How to Stop Home Foreclosure?
1. Talk to the bank or mortgage lender
The first thing you need to do is remain calm and call your mortgage lender. It’s necessary to figure out all information of your account and know the severity of the said concern. It the lender offers a help, you may still be able to continue your mortgage payments by assessing other options to generate another income such as selling assets, cutting out other household expenses, selling cars/things or taking out a loan from your retirement funds.
2. Talk about other alternatives to home foreclosure proceeding
The next thing you want to do is discuss whether your mortgage lender is willing to renegotiate the terms of your payment loan. These includes lessening the amount of interest rate on your loan or extending the payment plan. Other alternatives may include initiating a repayment plan schedule, asking to re-institute of your loan by paying all late payments and mortgage in arrears, asking for a special agreement to delay a foreclosure which allows the debtor to temporarily skip a payment and change mortgage duration.
3. Aggressive factors to stop foreclosure
If any of the above negotiations did not work, it is possible to take few options to stop home foreclosure. Some of these steps are:
* Selling Your Home
If you are not far behind your mortgage payments, and the housing market value is high, one possible option to avoid foreclosure is to sell it as soon as possible. Selling the house will not only prevent you from foreclosure, it will also let you be able to get a good price for selling it and maintain a good credit score. Ask help from real estate agents to give you an idea of the market value of the house. You might also want to consider getting a discount broker. Compare these 2 options and figure out which one is best for you in a timely manner.
* Sign a Deed In Lieu of Foreclosure
If your house cannot be sold, this option may work for you. Talk to your bank about signing a deed in lieu of foreclosure which permits you to transfer legal ownership back to the mortgage lender without the occurrence of foreclosure. This process is known as deeding the home back to the lender. The homeowner provides the mortgage lender a well-organized notarized deed and the lender pardon the mortgage, resulting to canceling the foreclosure proceedings.
The lender might also consider working an agreement where a homeowner can stay in the house until the time he can find a place to move.
* Considering a Short Sale of the House
Lastly, you can discuss another option for a short sale with your bank. There are some risk factors in doing this option but it allows you to sell the house to another home buyers and avoid the foreclosure. This is possible if your home is worth less than the amount you owe. This process may affect your credit score but not as bad as the foreclosure. You and the bank may need to discuss with your lender to determine if he will allow a short sale process. This is known as pre-foreclosure redeemed.
3. Consider Bankruptcy Filing
A bankruptcy filing is one of the most effective ways to stop foreclosure action. Chapter 13 plan may authorize you to repay the missed mortgage payment for over 3-5 years and be able to save your home. This legal action can stop all foreclosure. Ask for a thorough explanation of your options, time frame involved and costs. It may not permanently stop foreclosure action but in can eventually postponed it.
Start your free case bankruptcy evaluation to learn how to stop foreclosure fast.