FHA and HUD have resources available to help you avoid foreclosure.
If you own your home and have missed a few payments, the foreclosure process can start very quickly. As this is a stressful time for most people, it's important that you quickly learn everything you can to stop foreclosure processes and try to save your home. Be very aware: no one will do it for you and the process can move quickly. So, if you want to stop a foreclosure, you need to take responsibility and get the process moving quickly.
If you want to quickly learn about the terms and issues in the foreclosure process, see the Bills.com Foreclosure articles and advice page and get educated quickly.
Options to Stop Foreclosure
The first thing to know is that your lender is willing to stop the foreclosure process. In fact, almost all lenders hate foreclosing. That's right! Even though it is one of the most adversarial financial processes, they hate it too.
Mortgage lenders typically lose money when they foreclose, since most foreclosed homes are worth less than the value of the mortgage. Plus, the foreclosure process is expensive to manage and is stressful for everyone. What that means is that you have options. so learn about what you can do and start moving to stop foreclosure fast!
Stop Foreclosure Yourself vs. Hiring a Firm to Stop Foreclosure
There are many firms that charge a fee to negotiate on your behalf. Basically, those firms will work on your behalf to negotiate forbearance, loan modification, or to save your home. Be very careful of someone who wants to BUY your home, and if someone offers you that service (and you will get solicitations from vultures who hang around consumers facing foreclosure) make 100% certain that you first try to assess the equity value in your home and if there is equity available you can either refinance (Free Refinance Quote) or sell your home on your own.
If you do decide to hire a firm, since negotiating with the lender to find the best solution is complicated and time consuming, pick a good one and shop around. Depending on your situation and who your mortgage lender is, the nuances of negotiations are critical to a successful outcome. You need someone who is experienced at foreclosure negotiation. Your firm that will stop foreclosure will present you in a way that convinces your lender that you are a responsible person and that you are capable of developing a plan and getting back on track.
They will negotiate on your behalf and find the plan that fits your situation best, and help you stop foreclosure.
Your Foreclosure Options
This list of four options assumes your attempts to negotiate a short sale or deed in lieu of foreclosure were unsuccessful, as were your attempts to find a government program to refinance or renegotiate your mortgage.
- Foreclosure Mediation to Stop Foreclosure. This service negotiates with the lender to repackage the loan so that the borrower can become current again. It will help save your credit, keep you in your home, save your home equity and appease your lender. This process has to happen pretty quickly, and could involve one or more of the following:
- loan modification
- payment forbearance
- loss mitigation
- Deed in lieu of foreclosure. This is where you are unable to pay for the house and you voluntarily give the house back to the lender. This is subject to a deficiency judgment yet counts as a "less serious" foreclosure on your credit. However, you lose your greatest asset, your home. Also, not every lender will always accept this arrangement.
- Sell your house. You lose your home in this situation but you may save some of the equity in your home. Include the standard 6% Realtor fee when calculating your net proceeds from the sale. Also, be aware that because you are in foreclosure and under intense time pressure to sell your home, you may not receive the full market value for the home. Worse yet, three months from now, you may not have sold your home and now owe an additional three payments on your home and still face foreclosure.
- File for bankruptcy. This can be a very expensive and drawn out process through which there is no certainty of outcome. In the end, a court decides the outcome of all your assets and will leave you with a severely damaged credit record and the strong possibility of no home. If you are considering bankruptcy, you should contact an attorney to discuss this option. You can learn more about bankruptcy at the Bills.com bankruptcy page.
In the end, there are a variety of considerations when you try to stop foreclosure, so educate yourself and plan for the best resolution to the foreclosure process.