How to Stop Foreclosure...Bankruptcy isn't the only way!How to Stop Foreclosure... For whatever reason, you got behind on your house note and they've nailed a foreclosure notice to your door. Don't panic, there are several ways you can stop foreclosure. Although bankruptcy is one way, it's not the only way. I know you're feeling pressed, but the key is to do something quickly. The longer you wait, the fewer options you have. And if you wait too long, bankruptcy may not even be an option. I've seen it over and over again. It happened to our friend Sabrina. She kept saying " "The Lord will make a way..." So she refused do anything to stop foreclosure. She just kept waiting for a miracle. Well, Sabrina lives with her mom now. Sometimes the way the Lord works is to send you knowledge of what to do, then you have to do something!
This could be an opportunity for you to get out of your mortgage and get completely out of debt. Maybe you're underwater (i.e. your mortgage is higher than the value of your house). Don't get caught trying to save a sinking ship. It could be that you simply can't afford to keep it.
He who fights and runs away, lives to fight another day! So here's the critical question to ask yourself: "Do you fight to keep the house or do you decide to give it up?"
If you really want to keep the house you have some
alternatives to bankruptcy to stop foreclosure:
Most mortgage lenders have a loss mitigation department. Contact your lender and explain your financial situation. Sometimes lenders will agree to stop foreclosure and temporarily change the terms of your home mortgage loan. They may agree to reduce your interest rate, principal, or spread out the balance over more years (i.e. extend the amortization). Your goal is to temporarily change the terms to reduce your monthly payment until you can get back on your feet.
Ask your lender if they will agree to let you pay part of your delinquent payments now and pay the rest of the delinquent payments over six monthly payments. They will probably want you to make a down paymet of at least half of your delinquent payments plus any legal fees they've incurred. For example, if you're behind 4 monthly payments of $400 and the legal fees are $1000, you may have to come up with about $1800 down and agree to pay another $800 over six months. Also, you will have to keep your regular $400 monthly payments current. Usually, your lender will want to see copies of your paycheck stub or other proof of income and household expenses (i.e. a proposed budget). budget).
Don't confuse this with a Short Sale. A short pay is when your lender agrees for you to pay off your mortgage for less than the full amount actually owed. It's different from a short sale because the bank assumes you will keep the home and not sell it to another buyer or an investor. Here's how it works: Lets say you owe a balance of $60,000 on your home and you're behind $4,000 in payments. If your lendor agrees to let you settle your mortgage loan for only $45,000 you (or a friend or family member ) would then get a new mortgage for $50,000. Next, you would pay off your original mortgage with $45,000 and use the remaining $5,000 to cover any transaction costs. If you can't get a mortgage for the full $50,000 then get one for as much of it as you can and borrow the rest from relatives or friends.
Basically, you get a new mortgage and
pay off your old mortgage, legal fees and costs. But the problem is you may not have enough equity in your home to get a new loan. If you do, you may have to pay a higher interest rate to overcome your poor
credit scores.
This option is almost too obvious to even mention; but I'll list it anyway. In this case, you just pay your lender the delinquent payments, legal fees and costs to re-instate your mortgage. In most states, lenders are required to give you an opportunity to catch up on your delinquent payments and re-instate your mortgage at anytime before foreclosure.
If you decide you don't want to keep your house or if you realize your financial situation is such that you just can't afford it, you can stop foreclosure and give the house back. Here's how:
In this case, you get your lender to agree to let you sell your home to another buyer or an investor for less than your mortgage balance. Depending on the local market, many lenders will agree to a short sale. But you should be aware that the lender may try to pressure you to agree to pay the difference between what you sell it for and how much you actually owe. Try not to agree to this. Also, I have found that some banks will only agree to a short sale after you are at least 3 months behind in payments.
This is a fairly simple option to stop foreclosure. You simply give the house back to your lender. But you may have to get your lender to agree not to hold you responsible for any deficiencies. For example: If you give the house to the bank and they sell it at auction for $20,000 less than your
mortgage balance, you should make sure the bank agrees in advance that you will be forgiven for such a shortage. They will usually agree to this, but you will have to negotiate it and make sure it's in writing!
They can present foreclosure alternatives to your lender and negotiate on your behalf for a fee.
But whatever you do, don't wait until you're out of options. Do something! It's better to decide your own fate, rather than have it decided for you. Once you've turned your financial situation around, you can always get another house. Return to Debt Solution Page from Stop Foreclosure Page
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