The Foreclosure Process
The foreclosure process can be frightening for many people. Foreclosure is the legal term used when your lender repossesses your home for non-payment of your mortgage. The foreclosure process could seriously affect your ability to qualify for credit in the future. If you fall behind with your mortgage payments, you should head off the foreclosure process if all possible.
Before Your Lender Starts The Foreclosure Process
Starting the foreclosure process is a reaction, not an action, and the foreclosure process can be avoided with calm decisions and careful planning.
It is important to manage the foreclosure process proactively. If you believe your lender is about to start the foreclosure process, get on the front foot, pick up the phone, and engage with your lender.
Lenders do not want to foreclose, and will usually work with you to get you back on track with your mortgage. Lenders are much more inclined to work with you before they start the foreclosure process, or at least before they have reach legal judgement stage. By contacting, rather than avoiding, your lender at the time they are starting the foreclosure process, you can end up with a workable solution. If you are a homeowner and you believe your lender may be starting the foreclosure process, you should contact a HUD-approved housing counseling agency immediately.
After Your Lender Starts The Foreclosure Process
In some cases where your lender has started the foreclosure process, it may be possible to negotiate to modify the mortgage. Mortgage loan modification may include decreasing interest rate, re-amortizing the remaining balance, or extending the term of the loan. Loan modification is also referred to as a workout or restructure, and is a useful way to head off the foreclosure process before you lose your home.
You may be able to negotiate a delay in the foreclosure process to give you time to sell your your house, but make sure you can sell it by the planned date. Lenders do not take kindly to delays. If the house isn't sold by the promised date, there is no turning back. This makes is particularly crucial that you start negotiations as early as possible.
If all else fails, it may be possible to legally challenge your lender's right to foreclose - if it looks like negotiation isn't going to work, you need to investigate your options to stop the foreclosure using your legal rights.
When You Can't Escape The Foreclosure Process
The foreclosure process culminates with the lender taking possession of your home. Foreclosed properties make their way into bank auctions, where the properties are sold off to the highest bidder. The law does not require banks to sell foreclosed homes for market value, so you may see your home being sold for pennies in the dollar - a heartbreaking outcome.
At this point in the foreclosure process, you have no more options. This is why it is vital to be proactive and negotiate with your lender before they begin the foreclosure process, or at least before the process has gone past the point of no return.
Avoiding The Foreclosure Process In The Future
The best defence against foreclosure is a good offence. This begins when you take out your mortgage in the first place.
Losing your home to foreclosure is the last thing you want to happen to you and your family, but most people give little thought to the possibility when taking out their mortgage. To avoid the foreclosure process, buyers need to be aware of the intricacies of their home loans, and know what they are getting into, both short term and long term. Homeowners can avoid getting into trouble later by making informed financial decisions when purchasing their homes.
Borrowers who are most likely to keep their homes are those who negotiate effectively before the lender starts the foreclosure process. Mortgage lenders will usually want to avoid the foreclosure process as much as you want to avoid it -- or nearly as much, anyway. Foreclosing on property interferes with your lender's core business. Lenders are in the business of lending money, not managing and selling properties.
If you are notified that your lender is starting the foreclosure process, contact a reputable counseling agency. Laws about foreclosure vary by state. If you are low income, you may also qualify for free legal services during the foreclosure process. To delay foreclosure, and eventually to negotiate your way out of the foreclosure process completely, must be your top priority. |
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