Avoiding Foreclosure
Taking out
a mortgage
to finance the purchase
of a new home is a very big step in a lot of people’s
lives.
Once you are settled and making payments, it is very common
for an unexpected expense to come up, making it difficult
to make your monthly mortgage payments.
If you can no longer make your mortgage payment, you run
the risk of losing your home.
In the article, “How to avoid foreclosure,”
from mortgage-x.com, the author explains how to avoid
losing a home because of late payments.
Foreclosures are very serious, and are not something that
any home owner should take lightly. It could mean the
difference between you sleeping under a roof or under
a trashcan.
“It is the legal means that your
lender can use to repossess (take over) your home.
When this happens, you must move out of your house. Additionally,
if your property is worth less than the total amount you
owe on your
mortgage loan, you could be pursued by your lender
or the U.S. Department of Housing and Urban Development
(HUD) for a deficiency judgment. If that happens, you
not only lose your home, but there also would be an additional
debt that you would owe to your lender or to HUD. Foreclosure
or a deficiency judgment could seriously affect your ability
to qualify for credit in the future. So you should avoid
it if all possible!”
If you find a foreclosure happening to you there are a
few things you can do and there may even be some alternatives,
if you qualify.
First off, you should not ignore the letters from your
lender, and you should definitely not abandon your property.
You should also contact a HUD-approved housing counseling
agency. They may be able to offer advice and credit counseling
about your predicament.
Next, there are sometimes alternatives to foreclosure
altogether. A special forbearance can be arranged if you’ve
received an involuntary reduction in income or some other
unexpected expense.
“Your lender may be able to arrange a repayment
plan which would be based upon your financial situation
and may even provide for a temporary reduction or suspension
of your payments.”
A mortgage modification is also an alternative to foreclosure.
“You may be able to refinance the debt and/or extend
the term of your mortgage
loan. This will help you catch up by possibly reducing
the monthly payments to a more affordable level. You may
qualify if you have recovered from a financial problem
but your net income is less than it was before the default
(failure to pay).”
Partial-claim and Pre-foreclosure sales are also options
for some that may help a little bit. A last resort would
be a Deed-in-lieu of foreclosure, where you voluntarily
“give-back” your property to the lender. This
will obviously not keep you in your house but it may help
you get a mortgage in the future.
When trying to avoid a foreclosure, the author points
out a few important points you should keep in mind. “Don't
lose your home and damage your credit history if you can
help it. Call or write your mortgage lender immediately.
Stay in your home to make sure you qualify for assistance.
Arrange an appointment with a housing counselor to explore
your options. Cooperate with the counselor or lender trying
to help you. Explore every alternative to losing your
home. Beware of scams. Do not sign anything you don't
understand. And remember that signing over the deed to
someone else does not necessarily relieve you of your
loan obligation. Act now. Delaying can't help. If you
do nothing, YOU WILL LOSE YOUR HOME and your good credit
rating.”
Back to Articles
