The thought of foreclosure on a home that you have spent most of your life in can be devastating to the average home owner, but there is hope if you have knowledge and the right guidance. To be in a better position to stop foreclosure, you must act quickly. Once you are 30 days late, fees and interest start to accumulate. Waiting too long to respond to a foreclosure notice could cause you to lose your home that you raised your kids in. The techniques listed below will assist you with stopping your home from being foreclosed.
What are some steps I can take to prevent a foreclosure?
1.Talk with the HUD counseling agency for more options.
2.Ask the bank to suspend your payments for a couple of months until you get back on your feet.
3.Argue that you did not understand loan agreement when you first bought the house.
4.Try a loan modification. With this option, the lender modifies several terms of your loan, like the payment, interest and sometimes the principal.
5.See if the bank will go for a Short Sale. This is when you are selling the property at the current market value, and the price is lower than your original loan.
6.Ask the bank if they will take a deed in lieu of foreclosure. Here, you voluntarily turn over the title to the lender to avoid foreclosure and damage to your credit report.
7.Try refinancing before letting your home foreclose. With this option, the lender will construct a new loan for you with a better interest rate and payment plan. This method is impossible if you are underwater.
8.Research the procedures on how foreclosure notices should be sent out, and if any of the steps were violated contact an attorney for a possible lawsuit. By doing this, it will slow down the foreclosure proceedings.
9.File Chapter 7 bankruptcy as a last resort because it stops all foreclosure activity. You should be aware that the lender might ask the judge for a lift of stay, which would allow the foreclosure to proceed.
10.File a Chapter 13 to stop the foreclosure. By doing this you are telling the bank that you need time to work out your financial situation. From there, you will be put on a payment plan to start paying back all of your creditors including the lender.
Keep looking into other options.
Ask for a repayment plan. Payments are increased to make up for the past due payments. You can make up these payments over a short or a long period of time. For example, if you are three months behind with a monthly payment of 400 a month, you can stretch out the $1200 over 12 months where you would pay a extra 100 a month on top of your regular payment.
Look into the Obama Plan-Harp-Home Affordable Modification Program. This plan is geared toward homeowners who are underwater in their loan. Harp allows you to rewrite your mortgage for a better interest rate and to convert from an adjustable rate to a fixed rate. For more information, go to www.hmpadmin.com
Look into the Obama Plan and Loan modification. In this plan, you are on a three-month trial period. During this time, you must make all your payments on time. Concluding the trial period, if there were no changes in your financial situation. The loan will continue to be modified at a reduced payment. Moreover, during the trial period, any foreclosure will be suspended. Be advised that if you have good credit when entering the trial period, it could hurt your credit. The reason it could damage your credit is the lender is reporting a modification of the loan and not the original loan.
What is mediation?
It is a process where the homeowner and the lender meet in person to exchange information and discuss ways to avoid foreclosure. A mediator facilitates this meeting.
Can mediation stop foreclosure?
Mediation can slow the foreclosure down, but it won’t stop it, unless you and the bank come to an agreement during mediation.
Do all states offer the mediation program?
No, some states offer the mediation program while others do not. Check with your lender or consult with a real estate attorney on this matter.
How does the process work?
After you default on your loan, 90 days to 120 later the bank will send you a Default and Election to Sell Notice along with a mediation form. You must note that every state is different with this procedure. If you choose mediation, you have 30 days to return the mediation form. After you return the document, a mediation will be scheduled for you and the bank. During the mediation, you try to work out various options with the bank on how to avoid foreclosure such as the options listed above and in the bullet point section. If no agreement is made, the bank will continue with foreclosing on your home.
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About the Author:
Mark Clayborne is a Certified Credit Consultant with ten years of experience assisting consumer with credit issues. If you liked this article, then I invite you to sign up to read the first chapter of my book Hidden Credit Repair Secrets and get a Free Restore your credit E-class by clicking here
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