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Avoid Foreclosure

How To Avoid Foreclosure

Unfortunately, everyone runs into a time of life when money is tight and juggling finances is a serious challenge.

Individuals owning a home could be in the position of having their home foreclosed for lack of payment. If you are in a compromised position, but desperately want to do what you can to save your home, the good news is that avoiding a foreclosure is possible if you know how.

A foreclosure means that your mortgage company or lending institution can take your home back to resell if you fall behind on your payments. When this occurs, you have several options.

First, you can go through a process to keep your home. Second, you can sell the home on your own and then pay off the loan plus any fees. Third, you can allow the home to go through foreclosure. The bank or mortgage company will sell your home leaving you responsible for any difference between the price the house sold for and the payoff balance.

If you fall behind on payments and begin to receive letters from your mortgage company, most importantly, NEVER ignore them. Instead, call the number provided on the letter and talk to a representative, explaining the reason why you fell behind.

Like you, the mortgage company wants you to keep your home. After all, foreclosure is a hassle and expensive proposition for them, not something they want to do. Therefore, they will usually work closely with you to provide all possible options.

With a Special Forbearance, the mortgage company provides you with a temporary reduction or even a suspension of your monthly mortgage payments. If you have recently lost your job, had a reduction in income, or your living expenses have increased beyond your means, this option may be ideal.

Another option is a Mortgage Modification. With this option, your mortgage is refinanced or the terms of your loan extended. The way this program is designed, you have an opportunity to become caught up on payments.

A Partial Claim is another possibility whereby your mortgage company would help you secure an interest free loan from HUD, which helps you bring your mortgage to a current payment status.

Remember, if you fall behind, rather than worry about foreclosure, talk to your mortgage company to see what programs you would qualify for so you can stay in your home. Never ignore the problem, because you likely have several viable options to fix your foreclosure problem.

Gerry Vandewall is a foreclosure consultant.

Foreclosure Update: May 2007

The housing market, especially the sub-prime lending market, has crashed in most parts of the country. Some of the biggest sub-prime lenders are under criminal investigation and have gone under. The whole mess is stressing the fabric of our financial system.

The government has gotten into the act, with the Comptroller of the Treasury strongly urging more stringent lending standards be applied from this point on.

The problem is that many homeowners borrowed - or were lent - more than they could possibly afford, especially after teaser ARM interest rates were adjusted upward. Many borrowers apparently did not realize that their ultra-low payments were due to the fact that every payment that did not cover interest was added to the principal of the loan.

The bottom line is that these borrowers now have negative equity in their houses. Also there has been a major increase in unsold housing equity due to people trying to exit the market at any price.

Lenders know this problem exists. They are taking proactive steps to help homeowners who are facing payment increases. They are contacting borrowers at the first sign of trouble.

They are very willing to refinance troubled borrowers into fixed rate mortgages. They are also willing to let borrowers walk away from underwater mortgages by forgiving part of the debt - but be warned that this loan forgiveness creates taxable income to the borrower.

Finally some of the biggest banks have pooled together over $6 billion dollars to address this crisis while the Federal Reserve has held interest rates low.

If you are now in trouble or are worried you will not be able to make your mortgage payments in the future, contact your lender. You will find it very receptive to helping you work through your difficulties.

April 2008

As people walk away from their obligations and real estate speculators bet that they can wait for a bail-out instead of making their mortgage payments, politicans are scrambling to come up with the most comphrensive "rescue" package they can.

While this may offer comfort to strapped homeowners, it is also likely to stretch the bad effects of this catasphrope out much longer than necessary.

Recommended Site

Texas Mortgage Foreclosure Information
If you are a Texas homeowner and want to learn how to avoid foreclosure, bankruptcy or credit issues visit Texas Mortgage Foreclosure

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