You might think the loss of your home is inevitable, especially now that you’ve missed three mortgage payments, or if a Notice of Default was filed by your lender. Relax, there are 5 ways on how you can stop foreclosure:
- Foreclosure workout
Lenders would definitely lay out a contingency plan in order to help you with payments on your mortgage, than take your home in a foreclosure, up until the time your home is scheduled for auction.
- Short sale
If your lender gets an offer from a buyer, you must consider it. It is advisable that you keep on seeking for a buyer even if your house is in the market.
Foreclosure maybe stopped by bankruptcy while it is on track. Once you’ve filed a petition for bankruptcy, the federal law will prohibit any debt collectors including your mortgage lender from continuing collection activities where foreclosure is considered as a collection activity. Remember though that once you get to court, the bankruptcy trustee’s role is just to play as a mediator between the creditors and you. Yet, bankruptcy will never be an excuse for you not to pay the mortgage. The borrower should not forget that bankruptcy just buys more time for the borrower to replace the lost job or recover from temporary disability. The best resolution is still to immediately call and get advice and recommendations from a lawyer specializing in bankruptcy so you’d know if it’s a good decision to file for one.
- Deed in Lieu
This is when the owner who is facing a foreclosure signs the deed to the home, back over the bank. At first, you may thought of this as the best option, but this is off the same impact on the foreclosure and credit. So you have to think twice before you decide. The process of foreclosure is one way wherein the lender can be sure that the borrower is in a real poverty stage.
If foreclosure is still possible, a deed in lieu of foreclosure may be granted. Even if owner of the house advertised their home on the market for several months and still has not got any buyers yet, there will still be a few loans or liens that the lender will have to pay off; the seller can make a document about their hardships (financially); and the seller then initiates not just the documents but also the process of their request for a deed in lieu.
Note that even if all these factors are present, many lenders will still disagree with a deed in lieu. But who knows, there’s no harm in trying anyway.