Stopping Foreclosure With Debt Settlement And Loan Modification - Being Proactive

One in seven mortgages is currently in danger of foreclosure

. These are astronomical numbers, especially when you stop to consider that this is all mortgages, not just sub-prime loans. People who have never worried about their financial stability are suddenly in danger of losing their homes. Home values have fallen to such a level that stopping foreclosure is become more difficult. Many homeowners are turning to debt settlement and home loan modification to prevent foreclosure from becoming a reality. Banks have several options when a mortgage holder stops making payments. They can hire a third-party company to collect the missed payments, or make payment arrangements.

Lenders can wait for you to declare bankruptcy and lose all chance of recouping the loan. It is simply written off as uncollectible. However, in many cases, they attempt to repossess the property. This last option is what is known as foreclosure. Due to the sudden increase in defaults on mortgages, foreclosures have been responsible for flooding the market with homes for sale by the banks. They are often sold at a loss, if at all. The challenging economic climate has made it as difficult for people to buy homes as it is for homeowners to be successful in stopping foreclosure.

What most people need to hold onto their homes is some sort of debt relief. With debt settlement plans, homeowners are often able to reduce their required payments by 50% or more. Many creditors are concerned about collecting the debt owed to them and with the increase in bankruptcies being filed across the country, settling is often their best option. This process is also instrumental in stopping foreclosures, as homeowners will have more money to pay their lender. Banks are more willing to make arrangements with their mortgage holders for the same reasons creditors of unsecured debt are willing to settle.

If the debtor has to declare bankruptcy, they may get nothing. A loan modification is the process by which the original mortgage terms are modified by the lender, at the request of the homeowner. The goal is to lower the monthly payments. There are several ways this can be done. Sometimes the term of the loan is extended. In other circumstances, the interest rate is reduced. It is also common for both of these options to be incorporated into one loan modification package. This is has proven to be an effective method of stopping foreclosure, allowing the homeowner to retain their home.

by: Nick Adama

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