Preventing Foreclosure: Stopping The Lender From Taking Your Home
Finding out that your home may be foreclosed on can be extremely upsetting
. A person might easily become convinced that there is nothing that can be done towards preventing foreclosure.
Preventing foreclosure is, however, attainable by applying just a few foreclosure stopping techniques. There are a few critical steps that anyone in a difficult financial predicament needs to carry out in order to save their home from the disaster of foreclosure.
One foreclosure stopping method to think about is to look for an investor who is able to buy your home for the amount you owe or more. This way, you satisfy the balance of the loan with no additional impact on your credit. Depending on how much you owe, this may be difficult to do because the large number of distressed properties means that there is much competition for the investors' dollars.
That is where the 'Short Sale' shows itself as a feasible foreclosure stopping tactic. A short sale is where the bank reduces the amount of the loan payoff down to the price the investor is willing to pay and you walk away from the home. When the homeowner is not accepted for a modification of mortgage and is sure to lose their home, a short sale is a good way of preventing foreclosure. You'll still have to move, but at least your debt will be cleared. The homeowner's credit score is dropped by about 100 points, compared to a typical drop of 250 points in the case of a foreclosure and subsequent sheriff's sale. If the house is foreclosed, the home owner may still owe the difference between the sale price and the amount owed to the lender.
If no short sale investor is forthcoming, something similar can be done involving just you and the mortgage lender. In this case, a Deed in Lieu of Foreclosure is executed and the bank will take over your home in exchange for you moving out of the home and leaving it in good condition.
Short sales and Deeds in Lieu of Foreclosure will both have a negative impact on your credit. Generally, this will last for about two years instead of five or more years for a foreclosure.
Another foreclosure stopping method is to negotiate either a forebearance agreement or a loan modification agreement with your lender. Depending on the specifics of your situation, it may be possible for you to work out an agreement with the bank that will make it possible for you to stay in your home. The lenders currently have a lot at stake in preventing foreclosure. Hundreds of thousands of bank owned homes are sitting vacant. They represent liabilities, not assets, to the lenders.
Also, both federal and state government agencies are providing the lenders incentives, and pressuring them to approve loan modifications. If you are falling behind on your ability to pay your mortgage, contact your banker and learn what can be worked out. You may be surprised to find that banks are more reasonable now than they once were.
As a homeowner interested in preventing foreclosure, be assured that you are not alone. 1 out of every 100 borrowers are having trouble with their mortgage payments. Millions of people have already lost their homes. And, while some of them have been fortunate enough to have found suitable rental homes or shared accomodations with friends, many have become homeless. So clearly, preventing foreclosure should be a priority for everyone.
The high rate of foreclosures is also an important issue for our entire country. Americans with a sense of social justice are interested in seeing that their fellow citizens are adequately housed. Beyond that, the economics of the situation demand the these problems are addressed before they become even more widespread. At last, Washington is taking serious measures to help homeowners in their attempts at preventing foreclosure.
Before it is too late, you should learn all you can about the various foreclosure stopping methods.
by: James Sopher
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