Stop Foreclosure

Stop Foreclosure

Definition

The process of preventing a foreclosure from occurring. Most commonly due to loan modification programs. Also accompli'd by paying off the debt or creating a repayment program with the lender.

What Are My Options to Stop Foreclosure?

signing a paper

Many people are in situations these days that require them to figure out a way to stop foreclosures. With the economy changing and the job market floundering, the housing market has struggled. People are in a great need of foreclosure help these days. If you are wondering, "How do I save my home from foreclosure?" then you are certainly not alone.

When you find yourself getting behind on your mortgage, it is important to know your options. Here are some things to consider:

  • Don't let it go too far: Get help early. If you see that you are slipping down the slope of not being able to keep up with your mortgage payment, the first thing you should do is contact your mortgage lender. Often, lenders are prepared to offer you something to help get you back on your feet. It might mean adjusting your loan parameters to reduce your payments for a period of time. It might simply mean delaying a payment until the end of your mortgage to give you a month of breathing room.
  • Don't ignore letters: If you do get behind, don't ignore letters from your lender. They are often the first part of the process of foreclosure. You need to know what is going on. Sticking your head in the sand will not save your home. You may need to take action, so open those letters and find out what is going on and when.
  • Call a HUD approved housing counseling agency. They are there to help you figure out your options.
  • Find out your rights: Each state is different in the way that they handle foreclosure. Some do judicial foreclosure while others do something called non-judicial. When you are facing foreclosure, you need to know what your state's process is.
  • Try to sell the home as a preforeclosure: If you can find a buyer who can purchase your home and help you avoid foreclosure, it might make sense to do so. Of course, the buyer will have to pay enough to pay off the mortgage and any lawyer fees as well.
  • You can sometimes prevent foreclosure by signing the house over to your lender as a deed in lieu of foreclosure. This is not a great option, but it is one that you can consider as you are looking for ways to stop foreclosure.
  • A short sale may be another option to stop home foreclosure. You can speak with your lender to find out about getting the proper paperwork together in order to list your home as a potential short sale.
  • In some cases, you may be able to still refinance your home to get lower payments. There are also some loan modification programs that may work for your situation.
  • As a final resort, you may decide that bankruptcy is your best defense against foreclosure.

What is the Best During Foreclosure – Chapter 7 or 13?

One popular way to stop foreclosure is by filing for bankruptcy. Many people choose to speak with an attorney about how to stop foreclosure, and this is one obvious choice. Bankruptcy does not always help with avoiding foreclosure in the long run, however.

When a person files for Chapter 7 or Chapter 13, the court issues an order that immediately creates an automatic stay. This means that all creditors must immediately cease trying to collect money from you until the stay is lifted. The foreclosure sale on your home will be postponed unless the lender is able to get the judge to lift the stay that is stopping foreclosure from taking place.

Sometimes, the foreclosure notice has already been filed which can block the bankruptcy automatic stay from working. This all depends upon the kind of foreclosure that is done in that state and what the time limits are.

For someone who wants to stay in their home even after bankruptcy, a Chapter 13 is a good option. This is because a Chapter 13 allows a person to pay the late payments using a repayment plan. Sometimes the payment plan can go up to 5 years in length. However, you have to meet certain income limits to show that you can pay the money back over time.

A Chapter 13 also helps you eliminate a second mortgage that may be causing you to fall behind. This is because the 1st mortgage has primary position. Your second mortgage may not have to be paid back at all.

Are There Any Foreclosure Assistance Programs?

One of the most popular foreclosure assistance programs is called Making Home Affordable modification program. It was instituted by President Obama during the height of the housing crisis as a stop foreclosure program. The program allows homeowners to choices such as reducing their monthly mortgage payment, reducing their interest rate, getting help if they become unemployed, getting assistance with a second mortgage, getting help if their home's value drops and allowing them a way to leave the property while receiving a $3000 relocation assistance payment.

There are also other programs such as HUD's Emergency Homeowner's Loan Program and even state and local programs that are aimed to stop foreclosure now. Many programs have sprung up over the last couple of years as the housing market has suffered.

Can a Loan Modification Help?

Some homeowners do find that loan modification programs can be of assistance when wondering how to prevent foreclosure. You may approach your own lender first to see if they would be willing to work with you. If not, there are government and private programs that you can check into for further options. There are also attorneys and lenders who specialize in modification programs for borrower's who are in trouble. Be careful that you check out the company in depth before working with them as you don't want to be taken into a scam. You don't have time to waste when it comes to foreclosure, so make your decisions wisely.

FAQ about Stop Foreclosure

  • The simple answer to this question is yes, bankruptcy can avoid foreclosure. However, depending on the type of bankruptcy that you will file - either Chapter 7 or Chapter 13 - there is a possibility that the mortgage company can do a work around and still foreclose your home.

    Filing for Chapter 7 or 13 means that the foreclosure proceedings on your home will be temporarily suspended. Keep in mind, however, that the bankruptcy will be on your financial records for 7 to 10 years. Among the two, filing for Chapter 13 is typically more powerful since it rearranges your financial life in such a way that not only can you avoid foreclosure - but get back on your feet as well. After filing for bankruptcy, a plan will be proposed to repay the amount which you feel behind on your mortgage.

  • Foreclosure is one of the most dreaded scenarios that homeowners have to face. The good news is that there are several ways that you can prevent foreclosures - or at least delay it within a time frame that will allow you to get back on your feet financially.

    Job loss, death in the family or a sudden illness are some of the reasons why you will fall behind your mortgage payments in the first place. If you are going through any of these, talk with the lender so that they will not file a Notice of Default which typically signals the start of the foreclosure process. You can either ask for more time to make up your payments, forgive a payment or two, spread out the missed payments over a longer term or completely change the terms of your loan.

    Considering a short sale, deeding the home back to the lender and if all else fails - filing for bankruptcy - are the other ways for you to stop foreclosure to your home.

  • Yes, there are many lenders who can help prevent foreclosures. When you go online to look for solutions to stop foreclosed homes from being re-claimed, you will stumble upon realtors who specialize in helping homeowners prevent foreclosures on their real estate property. Basically, the process to stop foreclosed homes involves loan modification. The one condition required for a lender to help you stop foreclosure is that the real estate property should be your primary residence. Once your mortgage loan and your finances are assessed, the lender will help modify your loan in such a way that the interest rate and the monthly payment will be reduced so that you can prevent your home from being foreclosed.

  • Yes, loan modification is one of the few ways that you can use to prevent foreclosures on your home. Basically, you as a homeowner will negotiate a deal with a lender to have your existing mortgage loan modified. To avoid foreclosure on your home, what the lender will do is offer you better terms for the mortgage loan - which includes lower interest rates and lower monthly payments. No matter what type of financial difficulty it is that you are facing which prevents you from making regular payments for your mortgage loan - this can easily be resolved by having a talk with a lender who specializes in loan modification. As a result, you can avoid foreclosure and save your home.

  • Most homeowners have the misconception that lenders or even banks like to have people's homes foreclosed. It is a long and arduous process that they would rather not deal with - only when absolutely necessary. As such, you actually have great chances to avoid foreclosure by negotiating as early and diplomatically as you can with the lender. In order for you to experience great results during the negotiation process, make sure to not wait until the last minute. If you know that your payment will be delayed for this month because you lost your job, they should give you a good financial leeway. You can either be "forgiven" a payment, given more time to make your payments or spread out the missed payments over a longer term. Otherwise, you can always opt for a loan modification so that you will get lower interest rates and more borrower-friendly monthly payments.

Go to the Foreclosures FAQ page

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