How to Prevent Foreclosure
Most homeowners now have extenuating circumstances which will prevent them from making timely mortgage payments. The only ones who won’t get this benefit are those who engaged in mortgage fraud; the ones who took out mortgages with no intention of repaying any of the money. Here are a few of those reasons:
o Job loss / unexpected unemployment
o Sudden illness or medical emergency
o Death in the family
o Divorce / loss of second income
o Excessive debt obligations
o Job demotion or promotion denials
o Inability to pay an adjustable interest rate that increases
o Unexpected major home maintenance expense
The best way to avoid foreclosure is to prevent the filing of a Notice of Default. Lenders do not have the desire to foreclose on a house, but will file a Notice of Default if required, to protect their economic interests. If your circumstances will not allow you to make your mortgage payment, you should contact the lender right away.
Don’t delay, be ashamed or disregard letters from your lender since doing this will may conditions more bad, not better. Depending on your particular situation and hardship circumstances, here are some options your lender might propose to you:
o Time to make up your payments – Lenders might agree to wait before taking legal action against you and let you work out a repayment plan that is affordable for you. That is known as forbearance.
* Forgiving a Payment – Being able to come to an agreement on how you can stay current and on top of debt even after missing a couple payments. (no resource to repay), the lender might give you a break and waive your obligation. The term refers to debt forgiveness, which is an action that hardly ever takes place.
One course of action is to add extra money to your monthly payment to cover arrearages; for example if your usual payment is $1,200 per month, the lender might accept $1,300 until you’re current. It’s a repayment schedule.
Never sign up for a mortgage before taking the time to figure out whether or not your lender offers adjustable loans – under such terms, interest rates can often be locked in place when low, or changed to more manageable levels. The lender could additionally extend the amortization time frame. A name for this is note modification.
o Add the back payments to your loan balance – If you have sufficient equity and meet the lender’s lending guidelines, the lender might increase your loan balance to include the back payments and re-amortize the loan. Refinance is the business term for this.
There are government loans that are specifically tailored to help you make the missed payments. That means it is known as a partial claim