Ways to Stop ForeclosureFend off those lenders and keep your home
The first step in stopping the foreclosure process is to become aware that you are in default and start working on a strategy to repay the loan. Usually missing one or two mortgage payments is ok but after that, you face the possiblity that your lender could start the foreclosure process. Lenders usually try to give their borrowers a few phone calls to inquire about the missed payments.
Letting your lender know that you missed your mortgage payment and why is very important. They will let you know what to expect if you continue to miss more payments and how much time you have. Sometimes lenders may give you a few months of slack to get back on your feet if you just experience a job lost or some sort of decrease in income.
Lenders and borrowers lose with foreclosures
Fannie Mae, Freddie Mac and the public mortgage servicers that are responsible for administering borrower loans have all tried to help increase loan "workouts" or "cures" and cut down on the number of homes that end up in the "REO," or "Real Estate Owned," category. Everyone agrees that contacting your lender to open a line of communication is the first step to take.
Banks and lenders aren't trying to stop foreclosures for goodwill, but because they usually end up losing thousands of dollars, end up with owning a home that sits around rather than money coming in.
The foreclosure process starts rolling when the borrower misses his or her first mortgage payment by 16 days. After that, a loan servicer will try to contact the borrower and figure out what the two parties can do to get the payments back on track. After a month of delinquency and next month's payment looking to be in jeopardy, the servicer's attempts to collect the money will get a lot more serious. After about 3 months, the loan service will forward the mortgage to a foreclosure attorney.
From the time the mortgage is 16 days late to the 3 months, the loan servicer will usually give you a few options: a loan modification to reduce the monthly payments but extend the life of the mortgage or some sort of repayment plan. This usually requires the borrower to pay at least a 1/3 of of the delinquent amount upfront and repay the remaining owed PLUS the legal fees accured.
This is when a loan servicer agrees to let the borrower to sale the house at an amount below the remaining balance with the servicer forgiving any of the differences. The banks and lenders prefer this over foreclosures because the legal fees are a lot less.
Last ditch effort
For those who are able to make the monthly payments but can't pay back all the accured payments, then you might consider filing for Chapter 13 bankruptch which will hate the foreclosure process and allow you to repay the delinquent amount over time. This may affect your credit history but will allow you to keep your home.
Sometimes borrowers just need a few months to sell their homes. For those who fall into that category should think about getting a hard money loan from refinancing. The rates and fees on hard money loans are usually a lot higher than the typical mortgage rates. These loans give you access to the cash to pay off the mortgage in the short term giving you time to find a buyer for your home.
Remember that lenders want money and not your home. Contacting them ASAP is very important. However, if you are already in the foreclosure process, after 2 or 3 months of missed payments, contact a foreclosure expert ASAP to have them work for you and help you out so you won't lose your home.