You may have thought that you need to leave your home just after missing one or two payments on your loan. You don’t need to panic even when the foreclosure process starts. It is the legal right of homeowners to remain in their houses till the foreclosure process completes. The foreclosure process may take months or sometimes years to complete. We will discuss the whole process from falling behind on payments to foreclosure sale.
Payments Start Missing
After missing several payments, you always have the loan modification options to choose. You can even ask your lender for help. If you don’t want to bother your lender, you can take the advice of any loan modification expert. If you start missing your payments, don’t panic and never leave the house. Upon missing your first couple of payments, the lender simply gives you a notice. After missing more payments, the lender again sends you a letter which generally states that if you don’t make the missing payments, the foreclosure process will start.
Foreclosure Process Starts
When you don’t clear the missing payments, the lender starts the foreclosure process. After beginning the foreclosure process, there are always certain number of days to respond. You may have to go through judicial or non-judicial foreclosure process. Even when the foreclosure process starts, you don’t need to vacate your home. The foreclosure process may take months to complete. You can remain until the day of the foreclosure sale, as it is your right by law.
You can remain in your house till the foreclosure sale. You can also avoid the foreclosure sale making use of other options available, and one of them is short sale. Foreclosure sale is a lengthy process, so the lender may allow you to short sale your house to save some valuable time. However, if the foreclosure sale proceeds and someone buys yours house, they may start the eviction process if you don’t leave. The new buyer will send you the eviction notice if you don’t leave in the expected date. To avoid the eviction process, you can file a bankruptcy with the help of a lawyer. But to do so, you have to consult with the lawyer well in advance from the date of foreclosure.
What is a short sale
If you are falling behind your mortgage payments and facing the fear of foreclosure sale, you can short sell your house. Short sale is the process in which the homeowner, who is falling behind on payments, sells the property in lesser amount than the amount due. The lender may forgive the remaining amount or he may ask the borrower to pay the difference between the sale amount and the mortgage amount.
When to do it
You can think about short sale when you do not have any loan modification options to choose. Also, if you have asked your lender for help regarding loan modification but he hasn’t responded positively, you should consider about short sale. Hire a short sale specialist and discuss the available options with him.
Alternatives of short sale
Before choosing the option of short sale, you should definitely take advice of a loan modification expert. Such an expert can guide you to get out of your current situation. Talk to your lender if he can accept your request for a revised payment plan so that you can avoid the short sale process.
Key points to keep in mind before beginning a short sale
- If you want to short sale your house while you are facing foreclosure, take the permission of your lender before beginning the process. Explain the reason why you have fallen behind on the payments and why you want a short sale.
- Hire any professional who can help you with the sale. Avoid any foreclosure company as they might say that they will help you avoid the foreclosure sale. But the truth is, they will charge too much for a little or no help.
- The price of the short sale should be as close to the mortgage amount as possible. Ask any real estate agent about the price you can ask for your house.
- In some places, if you don’t get the money equal to the mortgage payment, the lender can take legal considerations against you. Ask your lender if he can waive the remaining amount. But if he refuses, don’t get frustrated because you have to pay a very small amount after the sale.
The foreclosure process is lengthy and costlier than the short sale process for the lender. So you can short sale your house while you are facing foreclosure by taking the permission from the lender.
Many homeowners borrow a heavy amount of loan in order to buy their homes. However, they might face difficulty when the prices of their houses fall. This will result in leaving the homeowner, who bought the house when the market was good, with mortgage debt more than the value of their home. When you owe more than the worth of your house, you can do the following things to save your home.
Contact Your Lender
The first thing you should do is to contact your lender and tell him about your situation. You should ask the lender for allowing a loan modification. If the lender accepts your request, he can reduces either your interest rates or your payments. Most of the lenders allow the borrowers to choose the loan modification option. Don’t panic in this situation and never stop making your payments. You can also hire a loan modification attorney in case you want some legal help.
Those homeowners who are unable to make payments can request the lenders for a deed-in-lieu. In the deed-in-lieu process, a homeowner gives the ownership of the house to the lender. The borrower is then released by the lender from the loan contract and any further liabilities. Deed-in-lieu causes less damage to your overall credit score than the foreclosure.
A homeowner can also go for a short sale in order to get out of this situation. In this process, the borrower is allowed by the lender to sell the property or house for a less amount than what the borrower owes on it.
There is a misconception among many homeowners that the price values of their houses will never go up. This misconception can cost them a lot, as the real estate market is cyclic. If the property values are not high right now, they will definitely go up in future. Also staying put costs you less than short selling and foreclosure.
Bankruptcy can halt the process of a foreclosure sale. In the meantime, your loan modification application can be considered by the lender. However, bankruptcy doesn’t solve the problem of the difference between the worth of the house and the debt.It will still provide you the required time in which you can have your loan modification application considered. If the lender accepts your modification application, you will repay on new terms according to your financial status.
What is a foreclosure ?
A lenders makes use of the legal methods of foreclosure to take over a borrower’s house or property if he misses making the loan payments. The lender generally auction the home in order to recover the loss occurred due to the loan amount. However, there are several ways by which you can get your home out of the foreclosure. The methods of getting your home out of the foreclosure are discussed below.
Communicate with your lender
When you realize that you are going to be in trouble as far as the loan payments are concerned, communicate with your lender and tell them about your problem. Do not wait for the time when you won’t be able to submit the payments, so act in advance. Never stop paying bills until you make a way out of it. Discuss the loan modification options with the lender. The lender can help you a lot if you are unable to repay the loan amount.
Opt for a loan modification
Loan modification can provide a great help in order to save your home from a foreclosure. Communicate with your lender and ask for a loan modification. If the lender accepts your request, you will get the modified terms of loan. The modified terms generally consist of lower interest rates and increase in duration of the loan. You can also avail the services of a loan modification company for a loan modification. The lender might allow a loan modification on the basis of your current financial status.
Refinancing allows you to get a new loan in order to pay the previous loan amount. Home mortgage is the most common type of refinancing. Getting an approval for refinance isn’t an easy task, you may find yourself in more difficulty if your current situation lasts for more than you have expected.
Get the permission from the lender for a short sale. In short sale, the borrower sells the home at less price than what is owed on mortgage. Short sale is helpful in getting out from a foreclosure situation.
File for bankruptcy
Get a bankruptcy attorney who will help you decide whether it would be good to file for bankruptcy in order to keep your home. If you file for bankruptcy, you will have the protection of the court in order to catch-up payments. However, you still have to make your all payments if you consider this option.
Loan modification is a better choice in order to avoid the foreclosure sale when you are falling behind on your payments. The lender must agree in order to make the modification. When the lender accepts your application for a loan modification, the terms, like interest rate and loan duration are modified. In order to qualify for a loan modification, some key points should be kept in mind.
How to Qualify for A Loan Modification?
Most of the modification programs require you to show that you are going to fall behind on the payments. You should never go into default to qualify, as it can have a negative effect. Here are some loan modification tips for you.
Qualify When You Are Up-to-date On Payments
It is a good choice to apply before rather than waiting to be in the defaulter’s list. The following things are needed in order to qualify.
- Your primary residence must be your own home
- You are facing a financial hardship
- You have the income source using which you will make the payments under the modified terms
Applying for a loan modification using the primary residence has a higher chance of being approved. Lenders generally do not feel comfortable with the investment properties. So while applying for a loan modification, you must use your primary residence in order to have a high chance of qualifying.
Financial hardship may arise because of job loss or medical situations due to which the borrower is unable to repay the loan amount. It is understandable that this type of events can happen, but you should make it clear how you are going make the payment once the loan is modified. You should include the hardship letter in your application file for the modification. You can also send the hardship letter to the lender in advance to give him an idea about your financial condition.
One of the main factors lenders take into account while reviewing the modification application is the debt-to-income ratio. This is the ratio of the total monthly income to the total mortgage payment. This ratio should be between 36 percent and 45 percent in order to have high chances of qualifying.
Complete the Application
Complete your loan modification application and stay in touch with the lender. Take the advice of a loan modification expert if you think it is necessary. You have to submit some documents, like payment stubs, hardship letter and any other document the lender wants. To have a high chance of qualification for loan modification, make sure that all the documents are properly completed and updated. Sometimes, you may be asked to submit the documents again. But don’t feel frustrated, be calm and always remain in contact with the lender. If you follow all these necessary steps, you will qualify for the modification easily.
Loan modification is the process which involves making a permanent change in the terms and conditions of the loan agreement. The loan modification process is generally initiated by the borrower. The borrower requests a loan modification on account of his/her inability to repay the loan amount. If the lender accepts the request then new terms supersede the previous terms. The new terms generally contain lower interest rates and an extended loan duration. It all depends on the lender whether to allow the loan modification or deny it.
Why Should You Opt for A Loan Modification?
Modified loans can help you in many ways, especially if you are not able to repay the amount currently.
- Foreclosure sale can be avoided by opting for the loan modification option. If the sale is already scheduled, it can be postponed till your application for loan modification is reviewed.
- After the modification, you have to make much lower payments than the previous amount. You will have a payment amount which is according to your current financial situation.
- Foreclosure sale will do more damage to your credit score than the loan modification, so considering the latter one is much better.
Points to Remember While Opting for A Loan Modification
- If you are facing financial hardship and unable to repay the installments, you should never stop communicating with your loan lender. Do not ignore any letters or calls from the lender because it’s the lender who might accept your loan modification request.
- Always remember that after the loan modification, your payment amount will be reduced but the duration of the loan will be increased. So you will have to make the payments for a longer duration than before.
- There are many loan modification firms available. You can avail the services of one of these loan modification firms.
- Be careful about the loan modification scams. Sometimes, unscrupulous people try to take advantage of your stressful condition for their own benefits. They charge too much by guaranteeing that they will save your house from the foreclosure sale. Don’t get trapped in those scams.
Loan modification requires a lot of paperwork and you will pay the repayments for many years, so only choose it if you have no other option available. You should always contact your lender if you have any problems regarding the loan repayment. Communicating with the lender may save your house from the foreclosure sale and you may get the extension for your loan payment.
It is understood and agreed that encountering a situation of possible mortgage foreclosure can be quite difficult. Getting assistance from different programs started by the government can be quite an uphill task but it becomes further aggravated if someone is living in a state that has highest number of foreclosures.
Situation Looks Ordinary
Perhaps the greatest drawback of living in a state with highest rate of assistance required against possible mortgage foreclosures is that it will look like a very common problem and will be looked upon and dealt with an ordinary approach. People entangled in such a situation are always under pressure from their financial position and are usually facing stringent follow up from lenders. When they approach for asisstance, they realize that they are amongst a large number of people and the queue is very long. This can be very stressful. One must be patient enough and realize the gravity of the situation.
It has been observed that although some might think and believe that the scenario is changing, the fact of the matter remains that foreclosure assistance applications are on the rise. This has further worsening impact on the states that are amongst top foreclosure states. The assistance process in top states is already facing a lot of flaws and worsening situation will definitely not help.
Dilemma for homeowners
In the state that has topped in foreclosures, life could be really tough for homeowners. It is like extraordinary circumstances look like quite ordinary. This will always be a very difficult pill to swallow for such people. They can face depression that would further add to difficult financial position. Due to the enormity of applications for assistance, the government’s response could be really retarded one.
So it is true that mortgage assistance can be difficult for people living in the state that tops in foreclosures.
“Facing the difficult situation of mortgage foreclosure can be really difficult for any person especially living in a state with top foreclosures”.
Mortgage financing has become for anyone to move towards financial stability by wY of being able to develop or accumulate assets. However, due to various factors, most of which could be beyond one’s control, can really turn the tide. Once caught in a situation of possible foreclosure, one should always try to find a workable remedy. There are programs available that are designed to help people avoid such situations. However, these programs can be deceptive due to many flaws in exercising them.
Rigorous Qualification Process
A major drawback that that has become a part of many mortgage foreclosure protection programs is that such programs usually require a very rigerous process to determine the qualification. There can be a lot of requirements which are never easy to complete or fulfill. Instead of helping those who are in financial trouble and face adversity, these rigerous programs will do nothing but add insult to the injury. Even ascertaining a basic factor such as simple qualification for further processing can become very hectic. This will become very discouraging for the applicant who is already in a stressful situation.
Lengthy and tedious scrutiny
Another factor that has significantly reduced the effectiveness of programs that are meant to assist people in possible mortgage foreclosure is that even if someone passes through the jnitial phase of being able to apply for the same, he has to pass through a lengthy and tedious scrutiny process. This can again become very discouraging as usually this phase comes at a time when foreclosure be omes imminent and the person can face cinsiderable pressure from lender. This process needs to be improved and there should be ways devisec that avoid lengthy scrutiny procedures.
At every point during the process of obtaining assistance in case of possible foreclosure, there is an element of procedural delays that can become very frustrating. For every aspect, a simple affirmation or denial can take a lot of time as the procedura, delays play their part.
Putting it in a nut shell, the assistance programs can give a ray of hope to people having availed mortgage but face foreclosure. However, much needs to be improved before such programs really become helpful and start playing their part.
“Beware of making any false expectation for help in mortgage assistance programs”
In today’s world where gaining advantage through leverage has become quite an essential part of our everyday life. Mortgage financing also provides a leverage through which we cN build assets that would otherwise be very difficult. However, getting mortgage is one thing and saving it from foreclosure till its successful maturity is completely another. One should be fully aware about ways to avoid foreclosures through lender.
Always be in contact
A big cause that can turn the tide and convert mortgage into a bid headache is lack of communication between lenders and borrower. It is invariable that lack of contact or communication will give rise to apprehension and would eventually lead to a big gap between lender and borrower, turning the situation into an ugly one. This can eventually lead to foreclosure.
Discuss with the lender
Another important way of avoiding foreclosure through lender is to discuss the situation, even if it is a bleak one. Quite often, discussion can result in finding a solution to the problem. The financially adverse situation can have many ways out but can only be explored if discussed with the lender. The mortgages can be rescheduled, restructured, or any other changes can be made that would eventually save the mortgage.
Yet another important factor to save mortgage from foreclosure is that after discussing the situation with the lender, if any possible change or relaxation in terms is achieved, then it must be fulfilled. It has been observed that restructured or rescheduled conditions are monitored more keenly by the lender and deviation can have a very negative rather devastating impact and continuation of mortgage becomes a really uphill task.
Thus, there are many ways in which mortgage foreclosure through lender can be avoided. Those most important thing is to evaluate the importance of mortgage and keep in mind the outcomes of a foreclosure. The situation should be avoided as much as possible but if a default seems inevitable then there are the right ways to handle the situation. This can really be helpful in maintaining a successful mortgage plan.
Mortgage foreclosures can be devastating. Learn how to avoid
Foreclosure is the legitimate process where the lender intends to receive the unpaid amount from borrower who stopped to make payment. The recovery can be done through sale of assets via auction.
Negotiating for forbearance
Foreclosures have always been displeasing situation for borrowers and occupants. From receiving of court statements to eviction orders stress pulling experience have to be undergone. However this unpleasant situation can be overcome to certain extent with the art of negotiation asking for forbearance. Defining in simple terms it means holding back. Foreclosure process is delayed by the virtue of agreement between lenders and borrowers. Payment recovery is delayed for relatively shorter specified period with the hope that borrower will make the payments. Initially it was introduced for people suffering short term financial crisis. Seeking for forbearance can improve the underwater condition, providing the borrower a chance to retain property. Negotiating for rescheduling and modifying loan payments is definitely an art since exceptional convincing powers are required for that as lender need to be assured about future payments. However individuals might lack this trait and they need to hire counselling agents to perform this task on their behalf.
Finding the best loan modification company
In US there are few outstanding companies who excel in provision of loan modification services like mortgage modification, principal reduction assistance, and foreclosure forbearance, sale of asset, mortgage assistance and counselling. Equipped with industry experts, these agents act as a mediator in successfully establishing negotiation and achieving favourable results. Situation can be conversed with the lender in a persuasive way requesting him to increase grace period or to modify loan.
It is however need to be understood that any loan modification provider firm is not affiliated with Govt and such services are not accredited by lender or state so there is a good chance that despite of all efforts and negotiations the lender may glued to his original point of dispute disagreeing to give forbearance to the seeker. Service providers hold no obligation to give 100% optimum results.
Forbearance, delaying or eliminating foreclosures through art of communication.