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Mortgage Foreclosure and Default: How to Keep Your Home

Updated on November 16, 2011

When You Have Financial Problems...

By Andrew J Thompson

No one buys a home except with the expectation they will pay for it and keep it until they are ready to sell, or for the rest of their lives. But when untimely job loss, illness or other major financial crisis arises, there is often little you can do.

The first time you are faced with a decision of whether or not to make a payment on your home because money is so tight, you're likely to face some very deep agony. If you contact the bank asking for help, you're actually doing their job for them. But you are also likely to find they will do little or nothing as long as you are current on your mortgage.

In fact, the way HAMP and other loan modification programs are structured, you have to be at least three months behind on your payments before you can qualify. The problem is that once you do fall three months behind, you may never be able to qualify for a mortgage - at least with the lender who holds your note.

What do you do then?

Keeping Your Home

Once you are trapped in default on your mortgage, there is no easy way out. At this point, it's wise to engage an attorney to help you know and understand your rights and options. For example, because of the bank's own practices, you may be entitled to recover damages from the bank, instead of facing foreclosure.

Most people aren't interested in suing the bank or trying to recover money from their lender, and the best option is one that places a homeowner in a position where they are making the fair payment on the fair value of the home. Ideally, they are paying the full mortgage on time. But remember, we're dealing with situations that, through no fault of their own, homeowners have defaulted on the terms of a mortgage.

But what if, you negotiated in good faith to obtain a loan modification, or even more,


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