If you have missed consecutive mortgage payments, and your lender has sent you a Notice of Default (NOD), then it’s normal to come up with the thought of losing your house. However, there are these five effective strategies you can use to stop your house foreclosure.
As much as foreclosure is dreaded by the homeowner, most lenders also want to equally avoid the complications and hassle of a foreclosure. Therefore, in this case it goes best when both the parties are able to work out something on acceptable ground. The conditions or compromise may work out a solution to get you back on track with the mortgages.
After the lender files the NOD and before the scheduling of an auction, if a buyer is interested in buying the property then lender should consider it. After foreclosure, the lender will go through the same process of hunting a reasonable and qualified buyer to sell the property. Therefore, a short sale in this situation occurs as an opportunity for the lender as well as it will save him time, money and effort of finding a serious buyer. So even if the foreclosure process has been initiated, continue to actively search for a buyer.
A bankruptcy stops the foreclosure process instantly. Once you have a filed for bankruptcy, the federal law restricts any debt collectors or your mortgage lender from continuing the reclaiming activities. Foreclosure is a collection activity, therefore, the day your lender comes to the knowledge that you have filed for bankruptcy, the foreclose process will be officially discontinued. But the fact should not be mistaken that bankruptcy never puts you off from your debt and mortgage obligations completely, it just buys you enough time to recover some of your lost financial strength. The law acts as a mediator by requiring your mortgage lender and other creditors to work with you collectively in working out a feasible repayment plan so that you can get back to business.
4.Deed in Lieu
In a Deed in Lieu, the homeowner tends to avoid foreclosure by voluntarily conveying the collateral property (the home) back to the lender in return for getting release from all obligations under the mortgage. This sounds like a great option, but in reality is not as simple as it sounds and affects the credit of homeowner equally as a foreclosure does.
Lenders are typically very reluctant to agree on this move due to a number of reasons including:
•The homeowner could sue them claiming the lender was not cooperative and understanding in working out a solution.
•They must pay the second or third mortgage payments or home equity lines of credit (HELOCs) before signing a Deed in Lieu.
A Deed in Lieu is not granted unless:
•Foreclosure is nearly imminent.
•The lender has put the property on market for several months and has no success selling it.
•There are few or no liens the lender will need to pay off.
Another strategy is to talk to your lender if your loan can be modified to ease financial hardship. Loan modifications are permanent changes to your mortgage payments. If you have a fixed-rate loan, then your payment period could be extended by lowering your interest rate which in turn reduces your monthly payments.
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