Use 4 Ways to Stop Foreclosure

There are 4 specific ways to stop a home foreclosure that you can do yourself, without hiring an expensive attorney or service. You must correctly follow the steps for each way outlined to avoid costly mistakes and stop the foreclosure fast.

If you are one of the millions of homeowners facing pre-foreclosure due to unexpected circumstances including a huge increase in your house payment because your ARM or adjustable rate mortgage has reset, there are solutions that will help you either sell your home successfully or keep your home and make your house payment more affordable.

The four primary solutions to stop your pre-foreclosure or foreclosure proceedings:

1. Negotiate a short sale

2. Negotiate a loss mitigation

3. Refinance your loan

4. Bankruptcy

Let me easily explain what these solutions are.

1. Selling the house by negotiating a short sale

If you must sell your home and...

[1] Your loan balances and costs to sell exceed what your property is currently worth and

[2] You don't have any money to make up the difference between what you owe and what you can sell your property for...

you will need to get your lender(s) to agree to discount the loan balance owed and pay your selling costs including your real estate agent's commission.

You will have to prepare a package of documents the lender(s) will provide to you to make a "case" to convince the lender that taking a "short sale" loss will cost them less money than letting the house go to foreclosure.

Your real estate agent can help you complete the short sale package. There are a couple of thoughts on this. First of all, I recommend you educate yourself as much as possible about the short sale process.

You can search around the internet for bits and pieces of information or you can get a comprehensive education for about $50 from a "Virtual Short Sale Expert" (try hiring a lawyer for 1 hour for that amount) to make sure your agent knows what they're doing to avoid costly mistakes. Remember, once the NOD (Notice of Default) is filed, you're "on the clock" ticking away to the foreclosure sale date.

Once you learn how to negotiate a successful short sale you may even decide to sell the property yourself.

Learn how do to it yourself with a step-by-step guide written by a "Virtual Short Sale Expert" at the end of this article.

Keeping the house

If your goal is to try and save your home from foreclosure and you want to still live in the property and have affordable payments, your next solutions are loss mitigation, refinancing the loan(s) and filing for bankruptcy protection.

2. Loss Mitigation

To mitigate means "to make something less harsh or severe." So, in the context of what we're discussing, this foreclosure solution involves you negotiating with your lender(s), namely their Loss Mitigation department, to make the impending foreclosure sale "less harsh or severe" by negotiating an alternative solution that benefits you and your lender.

Even if you are "upside down" or "overleveraged" on your equity in the home, a negotiation can be worked out.

Solutions can involve a loan modification plan or a repayment plan that is realistic for the both of you. A loan modification plan may include a partial payment of amounts in arrears and then an extension of the loan terms.

Now dealing with the Loss Mitigation department will be an adventure in itself. You can just imagine how overwhelmed they are with hundreds or thousands of files on the desks of loss mitigators in the department. There's also the issue of convincing them of the realities of your market, that your home is not worth what they may think it is worth. Values are declining in a matter of a few months.

Again, I will recommend that you educate yourself on how to work with your Loss Mitigation department before you pick up the phone to contact them. You don't want to mess this up. There are strategies that work like magic. You also need to know the single best way to assemble a complete, professional-looking, proposal package and send it at the right time so it gets accepted.

You can hire a Loss Mitigation Specialist or service to do this for you. This will cost you on average, $1,500. Depending on your situation it can be less or a lot more. The other option is to spend a fraction of that cost, about $50, and learn from a "Virtual Expert."

Learn how to do it yourself with a step-by-step guide written by "Virtual Loss Mitigation Expert" at the end of this article.

3. Refinance your loan

Another solution to your pre-foreclosure problem is to refinance your loan(s) that are in default. This solution may not work for you under certain circumstances, including:

1. You don't have the equity needed to refinance your loan(s)

2. You have mortgage lates on your credit report and other derogatory credit accounts. The terms of the new loan may be worse than what you've got already.

3. If you have a pre-payment penalty with your existing loan, that can be a big chuck of change to lose.

4. Bankruptcy

Filing for bankruptcy immediately stops all of your creditors from seeking to collect debts from you (including your mortgage), at least until your debts are sorted out according to the law. Filing for bankruptcy is not as easy at it used to be with the new bankruptcy laws that went into effect October 17, 2005. The new bankruptcy law requires, among other things, individuals to go thru a minimum three-month credit counseling period before filing for bankruptcy. You may not have enough time to do that if your NOD has already be filed.

Summary

These are the best ways to stop pre-foreclosure and avoid foreclosure all together. If you have received an NOD you don't have time to waste. Make a decision and take action on one of these solutions. You should definitely look into the short sale and loss mitigation solutions. Learn more about doing it yourself to save a lot of money and still do it professionally with the help of a "Virtual Short Sale Expert" or "Virtual Loss Mitigation Expert" today.

P.S.

One more thing you will likely want to do once you solve your foreclosure problem, and that is to fix your credit. You probably have mortgage lates and other derogatory items on your credit report that you would love to have permanently removed.

This can be accomplished, too, on your own, without having to pay an expensive attorney or hire a credit repair company. You may have already guessed - you can use a "Virtual Credit Repair Expert," too! You can learn more about this following the link above.

Best wishes on stopping your foreclosure