3 Most Popular Options To Avoid Or Stop Foreclosure

There can be several options to stop foreclosure, but you will not be able to exercise these options once your home is sold as part of the foreclosure process. Before it’s too late, seek legal advice from an asset protection attorney to know the best course of action. Following is a brief rundown on three most popular ways to save your home.

Special Forbearance

A Great way is to negotiate a more affordable repayment plan with your lender. Prepare a proposal and contact your lender. There is no need to hesitate because even lenders are only interested in getting their money back. If you show your willingness to make the repayment provided the terms made a little easier, they may be interested in your proposal. Depending upon your financial situation and an array of other factors, your lender may allow you a temporary reduction. Lenders often stop foreclosure and provide temporary reduction in monthly payments to those consumers who are experiencing an unexpected increase in their living expenses (because of a certain crisis) or they have recently lost their jobs or the source of income (whatever it was). When you approach your lender with a proposal for a repayment plan, your main task will be to convince them that you are able to meet the requirements of the new plan if approved. So, make sure you bring necessary documents in support of your claim.

Mortgage Modification

Another way to stop foreclosure is to refinance your existing mortgage (that you are unable to pay) and get the repayment period extended on the new mortgage. This way, you will be able to keep your home while making much lower monthly payments. The way this helps those with mortgages is by getting the new monthly installments reduced to a level that is affordable for you. If you are self-employed, don’t worry as there are self-employed mortgage options available to you. This may mean an extended loan term with higher rate of interest. If you are ready for these compromises, this option may just work for you.

Partial Claim

Even if your lender rejects your proposal for a more affordable repayment plan, they may still be interested in working with you and find out an alternative solution. For example, they can file a partial claim and help you obtain an interest-free loan (known as promissory note) from HUD. The amount of money you borrow as part of this loan is paid to the lender in order to make your mortgage current. This way, you can not only stop foreclosure and save your home, but you can also get current with your mortgage payments. Further defaults though can put you in a more serious debt problem. The money you borrow as part of the promissory note will not be due instantly; you will be liable to repay the interest-free loan from HUD only after your mortgage matures, or you leave or sell your property. Obviously, not everyone can qualify for this option. There are basically three qualifying criteria that include the proof that you will not make further defaults after the mortgage becomes current, your mortgage must not be already in foreclosure (which means you will have to act in advance to utilize this option), and that you must be at least 4 months behind your mortgage payments but not more than 12 months.

Overall, you can be in a much better position to stop foreclosure and save your home provided you know what your options are, which one is the most suitable in your case, and how much time you have to exercise that particular option.