What’s going on right now in our country with so many homes going into foreclosure is due to outrageous loans made to almost anyone who could cause a mirror to fog up. In different parts of the country, many lenders even committed fraud by placing a higher value on homes than they were worth, simply so they could inflate the amount of the loan needed by the homeowner, and boost their own profits. The fears over the US sub prime mortgage market have triggered a global credit crunch playing havoc with Wall Street stock portfolios, and dragging down global markets. In case you’re not familiar with the term, Sub prime loans are offered at high interest rates, and usually on adjustable terms, to Americans who have a poor credit rating, and might otherwise be denied loans. But as interest rates have risen, so have those adjustable payments, leaving many homeowners stretched beyond their means.
Here are 7 Ways to Stop a Foreclosure
1. Contact your lender and let them know your situation. If you’ve lost your job have or some other type of hardship going on let
them know. They can give you time to help get your life back together, but you must call them as soon as you know you’re
going to miss a payment. The longer you wait, or if you wait until you actually miss your payment, it makes it more difficult to
ultimately get the problem solved.
2. Ask for forbearance. This allows you to delay payments for a short period of time, with the understanding that another
option will be used afterwards to bring the account current...for example, if you know you’ll have the funds to bring your
account current by a specific date because of a guaranteed sum of money you’re receiving.
3. Ask for a repayment plan. This is where the lender agrees to add, a certain amount of the first missed payment onto each of
the next subsequent two payments. These plans provide some breathing room for you, if you only have short-term financial
problems, such as a sudden expensive repair or a medical expense that makes it too difficult to pay your mortgage for one
month. If you have already missed two or three payments and owe a couple thousand dollars in lender legal fees, the lender
of your mortgage may still try to arrange a repayment schedule. But you will likely have to pay a third to a half of the delinquent
amount upfront, and then pay off a portion of the remaining balance each month for a year or more. Also, never ignore the
lender’s letters or phone calls. Ignoring the problem won’t make it go away and if you’re going into a foreclosure process,
there are other fees and costs involved and ignoring them only makes these worse.
4. You may also be eligible for a loan modification plan, designed for people that can’t afford repayment plans. In a modification,
the lender actually adjusts the terms of the loan to make it affordable. It may lengthen your amortization schedule or lower the
interest rate to cut the monthly payments, or roll the past due amount into the loan and re-amortize the new balance, so you
can pay the additional debt back over time.
5. Some companies may be willing to offer you a “short refinance,” too. With these, the lender agrees to forgive some of your
debt and refinance the rest into a new loan. This way, the lender still gets more money than they would by foreclosing on you.
6. A Deed in Lieu of foreclosure (DIL) is an option in which you voluntarily deed your property back to the lender in exchange for
a release from all obligations under the mortgage. Unfortunately, there is no way to do this without hurting your credit, unless
you get the mortgage company to report your mortgage account as paid in full. You may face income tax issues resulting from
the lender forgiving part of the debt (which the IRS will likely treat as income to you, even though you don’t receive any cash in
the transaction), but you might be able to get yourself out of the hole and start over again sooner rather than later.
7. If none of these 6 methods work, and you can afford your normal monthly mortgage payment, but can’t afford to make up the
delinquent amount and legal fees because your lender offered a really harsh repayment plan, you may want to consider filing
Chapter 13 bankruptcy. Doing so temporarily halts the foreclosure process and can force the mortgage lender to accept a
more friendly repayment plan. This is a last resort, and will still negatively affect your credit.
If none of these work, there is one other option. As you may know, a foreclosure is devastating to your credit rating and can affect it for 7 to 10 years. What’s more, buying or even renting another home in that time period may be impossible for you. But, there is one more option where I may be able to help you personally. Even if you can no longer afford your home, you can still protect your equity and keep a good credit rating.
Here’s how:
Up until a few days before the bank forecloses on your property, you have the opportunity to stop that process by having someone purchase the property. I may be willing to do this for you. I arrange creative, legal and ethical ways to buy property or assume mortgages from people who need help. I may even be able to let you stay in the house, depending on your situation. The bottom line though is this; if your situation allows it, I can stop your foreclosure, and often put money BACK in your pocket so you can start over in a more affordable home. If you don’t have the money to pay the lender off, and see no real chance of making up the payments & costs, and you would you be open to discussing opportunities that could relieve you of this burden, please click here and you will be contacted about our home buying services.