Learn how foreclosure defense works.
By definition, the foreclosure process consists of the return of a home by the homeowner to the lender, if the homeowner has been able to pay a mortgage for several months.
The legal strategy known as foreclosure defense, consists of paralyzing the foreclosure proceeding or stopping it altogether.
For many homeowners, foreclosure defense is an opportunity to buy time. In some situations, time is all a family needs to get back on their feet and remain in their home. Time also affords homeowners an opportunity to execute a short sale, strategic default, deed-in-lieu, or even a mortgage loan modification.
A mortgage loan modification is exactly what it sounds like: a change in the terms of a loan. The objective: achieve a lower, manageable monthly payment.
Some of the main benefits of foreclosure defense are as follows: ...
Depending on your current situation, there may be different alternatives to stop the foreclosure process:
A loan workout agreement allows a borrower in default and their lender to renegotiate the terms of a loan. Until such time as your home is scheduled to be auctioned, most lenders prefer to work out an compromise that allows you to get back into compliance with your mortgage rather than take your home into foreclosure.
A short sale is a sale of a mortgaged property that is usually conducted after your lender has filed a Notice of Default (NOD), but before scheduling an auction of the property. This may be in the interest of the lender as it will save time, effort and trouble in finding a qualified buyer.
Filing for bankruptcy stops foreclosure immediately, giving you more time to recover financially from a temporary disability, but it does not free you from your debts. The law requires your mortgage company and other creditors to work in good faith with you to formulate a reasonable repayment plan so you can get back on track.
Before making a decision, it is advisable to consult with a bankruptcy attorney to find out if filing for bankruptcy is a good strategy for you.
Deed in lieu of foreclosure consists of the homeowner facing foreclosure re-signing the deed to the house back to the bank. This seems like a great option, but in reality it has the same impact on the homeowner's credit as foreclosure and is rarely accept by the lender.
Your lender modifies your loan, remove the "due on sale" clause and allow another buyer to assume your loan. You may even be able to negotiate a down payment from the buyer, which you can use to pay off the outstanding mortgage balance.
The buyer becomes your tenant with an option to purchase your home, and you remain the owner of the home until the buyer is able to purchase it.
Fortunately, there are many solutions to resolve mortgage debt problems and stop foreclosure. Some of them are as follows:
The easiest way to avoid foreclosure is to modify the mortgage. In a mortgage modification, the homeowner convinces the lender to renegotiate the terms of the mortgage to make the payments more affordable.
One of the advantages of filing bankruptcy is that it can stop the foreclosure process. This gives the debtor the opportunity to start paying his or her debts, little by little.
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