The Foreclosure is a process which begins when a lender or a borrower defaults on the loan payments. As a result, a public default notice is filed by the creditor. In agreement with the legal law, there should prove that the homeowner has defaulted in making the payments. Therefore, he or she should contact the attorney to pursue the court action. Consequently, the attorney will talk with the mortgagor for resolving the default. How will you stop the foreclosure process?
Even tough you might be thinking that the loss of your home is inevitable. The following are eight strategies which can enable you to stop the foreclosure process and save your home:
The Deed in Lieu
The procedure involves the homeowner who is facing the foreclosure signs the deed over the bank voluntarily. There are some reasons why lenders agree to take the deed in lieu: one of them is that they fear that the homeowner will sue later, alleging that they did not understand what was happening. Before executing a deed in lieu, the lender should be certain that the financial distress of the borrower is real. The foreclosure’s deed in lieu is not granted unless the: the owner has the home on the market for several months yet they are unable to sell, there are liens or junior loans which will have to pay off, the homeowner initiates the process which will lead to the request of the deed in lieu. From the detailed description highlighted, it a clear indication that there are various factors which need to be undertaken concerning the deed in lieu. However, it is worth trying so as to stop the foreclosure process.
The Lease Option (assumption)
Currently, most of the loans cannot be assumed. But, the average mortgage loans contains the: due on sale/ clause in which the borrower usually pays off the entire loan after transferring the property. If you are facing the foreclosure, it is important to persuade the lender for modification of the loan. Apart from that, he will delete the clause and allow another lender to assume the loan which you are supposed to pay off. Although the lender might want to assess the qualification of the new buyer, it will be a win option for all the individuals. As a homeowner, you might also negotiate a down payment for the buyer which can be used for paying off the due mortgage balance which is outstanding.
In the scenario of the lease option, the homeowner will become the tenant. In fact, he or she will continue owning the property until the lender becomes the tenant and he or she has saved the down payment money which is enough, sold their alternative home or sufficiently improve their credit.
In some instances, a one-time lump upfront payment option is made by the buyer for purchasing your house. This payment option is suitable for bringing the current mortgage. Furthermore, a lease monthly payment is made by the homeowner as well as applying for the mortgage. For you to utilize the rental option successfully so as to stop the foreclosure process, it is very vital to negotiate for the lease payments which will cover nearly all the mortgage payments, the insurance obligations, and the property tax. Thus, it will be enough for making up a difference and assist you to leave in other residential places.
The Foreclosure Workout
When your house is scheduled for auctioning, most of the lender will work out a compromise which will help you to get back on track with the mortgage plan. This is a great option which needs to be used so as to stop the foreclosure process.
The Short Sale
The lender normally schedules an auction after filing a NOD. If you make an offer to the buyer, the lender should consider this. Before foreclosing your house, it is recommended that you should present them with a short sale offer which is reasonable. This will assist them in saving time, effort and trouble of finding a buyer who is qualified in the soft market. Therefore, you should aggressively go on seeking for a buyer when the lender begins initiating the foreclosure process. Nevertheless, you can read a guide on how to sell your home faster when the foreclosure looms into action. In fact, it will make the best pitch when the lender abides by the short sale.
One can also cause the foreclosure to be dead in its track by using the bankruptcy principle. When you file the bankruptcy petition, the federal law will inhibit the debt collectors including the lenders from starting their collection activities. Since the foreclosure is part of the collection process, the bank will be aware that you have filed the bankruptcy. Consequently, the foreclosure will be frozen.
The guidelines for filing the bankruptcy are very simple. As soon as you get to the court, the role of the trustee will act as a mediator between you and the creditors. However, it will not let you off the hook for paying the loan which is due. Instead, it will stop the foreclosure. The foreclosure law needs the mortgage firm as well as other creditors to work in good faith. Thus, it formulates a reasonable payment plan which can help you. Regarding whether a bankruptcy strategy is a significant step to take, just consult with an attorney.
The Living Standards
Another way of stopping the foreclosure is to adjust your living standards. This will involve evaluating the monthly spending and looking for areas which you can cut back on expenses such as: eating out, electronics, entertainment, hobbies, and clothing. On the other hand, you should consider bringing a roommate for sharing of the monthly mortgage payment plan. If you have a vehicle, you should consider selling it so as to use the public transpiration.
Another effective way of avoiding the foreclosure is to request the lender for forbearance. If the lender agrees, he will reduce the mortgage payments temporarily for a short period.
The forbearance can be accessed by individuals who have shown their financial difficulties which are temporary. Alternatively, he or she might be expecting large sums of money which will enable them to have a better economic status. The lender doesn’t want to foreclose on the properties. Therefore, they are very much willing to work with you if you have good faith in making the payments and if you are not able to do so for a short period.
What you need to do while presenting the forbearance is to provide the lender with the financial documents and the bank statements for reviewing the financial situations. By doing so, the lender might extend the grace period for the late payments. With the forbearance, the payments can be skipped anywhere from one to six payments in a period of one to two years. Reduced payments can also be accepted up to eighteen months.
Restructuring of the Loan
If the financial situation has been changed permanently, temporary measures will not be beneficial to you. You should try negotiating for the reorganization of the mortgage. Moreover, ask the lender if you qualify for any of the mortgage restructuring programs available. The process of restructuring involves an extension of the term which you have to pay the loan. The delinquent payments can not only be spread for several years but also lower the interest rate on the loans
In a foreclosure process, the properties must be bought ultimately or rented by regular clients who want a private place where they can live in. If you are a homeowner, you will be running at a huge loss since another individual has taken your house. Therefore, it is important to avoid the foreclosures as much as possible since it will bring more harm than good as an individual.