Foreclosure is a legal process where the mortgage lender that you make your payments to seizes your property to pay off the amount that you owe. After a foreclosure has been filed by the lender does not mean that the lender has the right to take the property from you since there are several ways that a foreclosure can be avoided.
Can My Lender Help Me Avoid Foreclosure?
Despite the myths, banks want you to avoid foreclosure just as much as you do. Your money and interest is much more valuable to them than your house. If you communicate with your lender before the foreclosure is inevitable, your lender will likely be willing to work with you to avoid foreclosure by offering you alternative options to repay your loan.
How Can I Avoid Foreclosure?
There are several options that may be available to you that will allow you to avoid foreclosure:
- Short Refinance: A very forgiving plan offered by your lender where part of your debt is eliminated and the rest of the loan is refinanced.
- Short Sale: Another very forgiving plan offered by your lender whereby you are to sell your house for an amount lower than the loan amount still owed. The money goes to the lender and the rest of the loan is eliminated.
- Repayment Plan: Unlike the first two, you will not be off the hook to repay your loan with this one. Your lender in the case that some unforeseen expenses arise setting you back financially usually offers this. Lenders generally provide a couple of months for you to repay the overdue amounts and get back on track.
- Modify the Loan: Try to modify the loan and work out a deal with your lender. Often times your lender will be willing to modify the terms of your loan and have you pay something other than nothing because lenders do not like going through the foreclosure process either.
- Ask for Forbearance: A temporary forbearance could stall the foreclosure process which gives you more time to eventually pay the amount that you owe.
How Can Fight the Foreclosure?
If you decide to fight the foreclosure, there are several steps you should take:
- File A Written Answer to the Foreclosure Complaint and select a defense to the foreclosure that is suitable to your situation.
- Make the lender produce the note or promissory note. If the note is not found the foreclosure process cannot continue until the note is found.
- Consider selling the house before the house is sold or auctioned and keep any equity that you have invested in the house.
- Question the chain of title on the home that is being foreclosed.
- Negotiate a deed in lieu of foreclosure and ask the lender if they are willing to accept the deed.
- Declare bankruptcy to stop the foreclosure.
What Should I Not Do in a Foreclosure?
During the foreclosure process, there are several things that you must not do:
- Do not sign the title of the property to another person or company.
- Do not seek counseling from a non-HUD approved company or organization.
- Do not avoid court requests or court documents as it will result in large fees.
Should I Consult a Lawyer about My Mortgage and Foreclosure Issues?
Buying and financing a piece of real estate can be one of the most important experiences in your life, and facing the possibility of losing that property can be one of the scariest. A foreclosure attorney can inform you of your rights and obligations with regard to your mortgage and the foreclosure process. An attorney can also review any financial documents and advise you on the best way to proceed.