It can happen to the best of us, a death in the family or suddenly becoming unemployed can rob us of the income needed to pay our monthly mortgage bill. And the question becomes; how to stop foreclosure before I lose my home?
First off, the signs of you home going into foreclosure are pretty clear, you will receive letters, notices and payment overdue warnings before the foreclosure process begins. Don’t ignore these warnings, especially if you can address them in a timely fashion.
The best way to avoid this problem is to address it before the notice of foreclosure is sent out by talking to your lender. This is the most effective form of foreclosure prevention you can use.
It can be embarrassing to admit that you cannot pay your bills, but it’s far better to meet with your lender before any notice is sent out. Besides, your lender is interested in making their money back and it’s more work for them to foreclose rather than working with you. Your lender might suggest forgiving (missing) a payment or two if the situation is temporary, a repayment plan for the payment(s) missed, or may even refinance the loan if you have paid more than half your mortgage.
If your mortgage is based on a loan that is adjustable, you can negotiate with the lender to freeze the current interest rate before it increases or even lower it depending on the circumstances to allow you to pay your bills.You may even qualify for a smaller loan to cover your current payments. There are government programs that can address this situation, be sure to check into them.
Foreclose Questions ?
All these options are available to you, but what happens when it’s too late and the foreclosure notice is sent out. When this happens, the obvious questions raised are;
Can one stop it if it has already started?
Can one stop it if the date is set?
Most of the time, the answer is sadly no. But there are a few options you can use, one of them is to try and quickly sell your home.
You’ll need to consult with a real estate agent to find out the market value of your home, this is important as if you owe more than the home is worth (called a “Short Sale”) you will have to get an agreement from your lender as they stand to lose money.
You can also deed the home back to the lender, called a “Deed-in-Lieu”. This is where the homeowner basically gives the lender the property and the mortgage is forgiven. This can stop the action of foreclosure, but it will still negatively affect your credit rating. If you are on good terms with the lender, they may let you stay in your home until you can find another place to move. This is something you should work out with the lender before agreeing to sign a “Deed-in-Lieu”.
Does one need to get an attorney involved? Perhaps if you are working out a complicated agreement when signing any new deal with your lender. Having an attorney check over the new contract will insure that what is promise is delivered in the writing.
The best advice that can be given on how to stop foreclosure is to act quickly, before the notice of foreclosure is given. The sooner you work with your lender, the more options you will have.