How to Avoid Foreclosure | Foreclosure Assistance and Alternatives
How to Avoid Foreclosure
A foreclosure can be one of the worse situations a person can face in their lifetime. It can stress someone to their limits thinking they may lose their home. Life can be unpredictable you may be a new home owner or someone who has owned a home for a couple of decades it can happen to anyone at anytime. Although, you may feel alone and that there is no hope foreclosure assistance is out there waiting for you to find it. There are alternatives that you may not know about or may have thought was not for you. You really owe it to yourself to research ways to avoid foreclosure . You might find something that is right for your situation.
When you are in jeopardy of losing your home a person can make many mistakes. This is not the end of the world. It may feel like it is but there are many things that can help you. If you panic you may be setting your self up to lose your home.
However, if you remain calm and focused you are more likely to make the right moves and in the end discovering a way to keep you and your family or a loved one in their home.
You should sit down and figure your finances. Know how much is coming in and how much is going out. Be sure that you count every expense it is crucial for you to know your current financial situation. This will save you time and allow the people who are trying to help know what kind of help is available for you.
Speak with your Lender
The first thing that a lot of people do is get scared and avoid phone calls and letters from their lender. This is a big mistake. Be up front with your lender and don't be afraid to speak with a representative over the phone. You never know who you may speak with when a lender calls. It could be a seasoned representative or it could be someone who they have just hired.
When a representative contacts you if they are unsure of how they may be able to help ask to speak with their manager. Chances are when you get a manager on the phone you will then be speaking with someone who is more clear on policies that may be in place for someone in your situation. Make sure when this conversation takes place that you have your financial information on hand. After figuring your finances this should be your first step but is not your only option.
Remain in your Home
Another important first step is to remain in your home. If your home is left abandoned you may not be able to qualify for assistance programs. This is a more common mistake than people might think. People who feel that foreclosure is emanate may feel the stress from their lenders and feel like the best way to escape is to pack everything up and get away. Don't let this be you. Stay in your home and seek assistance's for people in foreclosure.
This is one option that can help you save your home and your ego. If you choose and qualify for a mortgage modification then you will have the chance to pay the full amount of your mortgage at a new monthly mortgage rate. The options of a refinance may include refinancing the debt or extending the term of your loan. People who have recently recovered from financial hardships may be top qualifiers for a mortgage modification.
Contact a HUD Counseling Agent
Contacting a HUD Counseling Agency would be on great starting point for finding the assistance you might need. Local HUD offices keep up to date on the newest and best ways to stay in your home. They provide you with programs and services that can assist you in avoiding foreclosure. They keep you aloft of Government programs and agencies as well as private organizations that can help you avoid foreclosure.
More Information on HUD.
Special Forbearance Agreement
A special forbearance agreement may be set in place by your lender if you have recently fell victim to a decrease in income or an unexpected increase in your living expenses. In a special forbearance your lender may either approve a reduction of monthly mortgage payments or a complete temporary suspension of payments. Your lender may require you to show that your financial situation has changed and require you to show that you are able to handle the new payments set forth.
A partial claim is foreclosure assistance provide to you and your lender by the U.S. Department of Housing and Urban Development (HUD). When your lender files a partial claim and it is approved the FHA insurance fund will make a one time payment on your property to bring all of your mortgage payments current. You will be required to sign a Promissory Note to HUD and they will place a Lien on the property. The Lien on your property will become null and void once the Promissory Note has been paid in full.
There will be no interests to be paid on the Promissory Note and the note must be paid when you pay off your mortgage or the property is sold. If you choose to stay in your home and plan to pay the mortgage off I would suggest setting up a savings account and setting aside any funds possible in order to be able to pay off the Promissory Note when you finally pay off your mortgage.
Partial Claim Qualifications:
- You are more than 4 months delinquent on your mortgage but no more than 1 year past due.
- You have went through hard times and are now ready and able to make full monthly mortgage payments.
- You are unable to meet qualifications for a forbearance agreement.
- You are still living on the property and able to maintain the property.
Selling your Home to Avoid Foreclosure
The following alternatives should be explored only after you have exhausted any other efforts of saving your home. The options below are only for those who can not meet any of the requirements above and see no other way of avoiding foreclosure. These options will not save your home but will help save your credit score and financial situation for future ownership of real estate. Make sure before you explore these options that you have checked into and made sure you do not qualify for any of the options above.
Sell your Home
It may not be what you want to do but some of us have no other option. This option may work depending on how the market is in your area you may be able to sell your home quickly and get out from underneath your mortgage and save your credit. The good thing about this option is if you can find a motivated buyer and you move your home quickly enough your home won't be foreclosed and you can walk away with some kind of money on the deal.
Pre-Foreclosure or Short Sale
In this option you will find more motivated buyers for your property as you are selling the property for an amount less than you owe to your mortgage company. There are companies as well as independent investors how look for properties that are selling under this type of sell. You may qualify for one of these if you meet some of the following requirements.
- You are at least 2 months behind on payments
- You are able to sell your home within 3 to 5 months
- Your lender has an appraisal done and your home meets requirements set forth by HUD
- You have obtained a marketable title
Deed-in-Lieu of Foreclosure
In a Deed-in-Lieu of foreclosure you have the opportunity to just let the lender have the property back. This option should really be your absolute last resort and requirements have to be meet before you even qualify for this type of foreclosure alternative. The bad part is you are losing the home of course but you are not doing as much damage to your credit.
Deed-in-Lieu of Foreclosure Requirements:
- You do not qualify for any of the other foreclosure alternatives
- You are in default
- You were unable to sell the property
- You have no other FHA mortgages in default
Apply These Foreclosure Alternatives
There are options beyond foreclosure for you and your home. Finding the one that's right for you might be a challenge but now you know that there is hope and that you may be able to stay in your home. Remember to be truthful with your lender and have all information on your finances in order and ready to go over with your lender or counselor and good luck.
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