10 Tips for Fighting a Home Foreclosure
This article deals with the options available to home owners who are facing foreclosure and choose to fight for their home.
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For every home owner, foreclosure is an ugly and frightening word. The thought that someone will come in and padlock your door shut and sell your home out from under you is perhaps among the greatest humiliations that one can face. In reality, it is just as unpleasant for the lender.
Every foreclosure may help them clear their books of bad debt, but it puts another person or family on the street who is going to the world what the evil bank did to them. Banks and lenders are usually more than willing to work with borrowers to negotiate a way to keep the owner in the home. There are some things to know to help you battle the risk of foreclosure.
Learn the foreclosure rules for your locality.
Especially at the state level, foreclosure laws are designed to prevent the bank from taking your home before they follow some rather intricate procedures. However, you have to remember that banks are only allowed to carry a certain amount of bad debt in order for examiners to declare them solvent. This means that the difficulties in executing a foreclosure are offset by the bank’s need to pass reviews by bank examiners. If you know the local foreclosure laws, you will be armed with the information necessary to prepare yourself to negotiate with your lender.
You need to act first.
The worst thing that a homeowner can do is wait until the foreclosure notice appears on their doorstep before talking to the lender. By that point, you may be too late to negotiate some type of agreement to remain in the house. By going to the lender as soon as you see a problem developing with your finances, your lender probably has a long list of options that do not yet include foreclosing on your house.
If you have been a good customer until this moment, it will get you some concessions from the lender.
If your financial situation has not totally crashed and you have stayed current on your payments, your lender will be able to offer you interest only payments for a while. In other cases, banks can simply let you skip the next two or three payment to get your finances back in order. If you are involved in a job search, this might give you enough time to get a new job and have the income to pay the mortgage. Sometimes banks just review your financial picture and offer a reduced payment that may even cause your principle to rise for a year while you are trying to improve your cash flow.
If you have a high interest rate, the bank may work with you to refinance your loan to reduce the interest and payment.
At the same time, if credit card debt or medical bills are creating your cash problems, the lender may extend your loan to be enough money to retire some of the excess debt. This will usually trade high interest for low interest money. The savings can be substantial. By using a combination of creative financial maneuvers, the lender can often keep most people in their home and happy. In some cases, there is federal funds available to help alleviate some of the money crunch on families.
Should your lender be inflexible in dealing with you, contact an attorney specializing in fighting foreclosures.
The lawyer should be able to review your specific circumstances and determine if you have a case or not. At the very least, the attorney will be able to lay out additional options for you to choose from as you proceed. If you are fortunate, a good attorney may be able to negotiate a better deal that you can because the bank really does not want an expensive legal battle to delay their foreclosure proceedings. They may know that the attorney can tie up your house for several years in court. This will cause them to offer more favorable loan options to save money in the long run.
Never stop dealing with the lender.
Even if the lender is continuing to proceed with the foreclosure, keeping in constant contact may bring your alternatives. It will also keep you up to date about when the foreclosure might be finalized. This will help you to plan what to do if you have to vacate your house. It will be better to leave on your own than to be publicly evicted.
Work with friends, relatives, and even your employer to try to raise funds to keep your residence.
You never know who might have pockets deep enough to bail you out of this problem. Many times if you can catch up your payments or make even a lesser by large lump sum payment, the lender will delay the foreclosure proceedings. You may find someone who is able to make your mortgage payments for several months while you raise money with additional work or a new job. They may require a formal loan be drawn up, but it is better than going down with a sinking ship.
Realize that some houses are not worth rescuing.
If you house is in serious disrepair, it may be cheaper and wiser to just negotiate with the bank to give it to them. Should the house need far more in repair costs than you have equity in the property, it may be best to let go of the house. In this case, even if you saved the house, it might cost you too much to make it worth living in to keep it.
Try to sell the house before it can be foreclosed.
This always sounds like such a good idea. However, if you are in trouble on your mortgage, there is a good chance that your neighbors are too. This means that home sales in your neighborhood are in the tank. The likelihood of you being able to sell your house before the foreclosure is completed is slim.
Besides, if your mortgage is behind, your repairs probably are too.
This means that you house is not ready to be on the market for enough money to retire your loan. The good news is that most banks cannot sell repossessed houses for the amount of the loan. They almost always take a loss. You may be able to convince them to allow you sell the house for less than the loan amount and accept that as payment in full. A short sale will impact your credit rating far less than a foreclosure or bankruptcy.
