Foreclosure – Can Foreclosures Be Stopped By John Nazareno It is everyone’s dream to own a home or built a house for his or herself. There are a few who are fortunate enough to secure one paid in full while many others try to buy one through financing or securing loans.
However, even you are religiously saving for the so-called rainy days and even if you have sufficient finances, there would come a time that you would find it difficult to face up to your obligations. Sicknesses in the family, a possible retrenchment at work or emergency purchases are unexpected instances where you could find yourself in arrears with your payment and then suddenly you are now facing foreclosures.
When legalities come into play in your financial situations or mortgages, it means that your predicament is deep serious. foreclosures are one of those legal terms that everyone detests, especially the homeowners and the financers or banks themselves.
In exchange for lending the money, the lender would hold a lien against the property, If the borrower does not make the required payments, then the loan goes into default and the lender could exercise the lien against the property, in order to take legal possession of the property for the purpose of selling the property to pay off the borrower’s loan. This process is called foreclosure.
CAN foreclosures BE STOPPED HOW TO STOP FORECLOSURES
Aside from the obvious reason of not paying their loans on time, homeowners get into foreclosures, even if they have avenues to explore, simply by ignoring calls or letters from their banks and lenders or just simply giving up on his/her property in the hope that the tide of things would turn favorable on them.
Although foreclosures are eventualities in securing homes through financing, it does not mean that this could not be stopped or remedied. The matter hinges on the homeowners themselves if they want to keep the property for sentimental reasons or just simply foreclose it and just face the consequences of their action, notably severe damage to one’s credit rating.
If you are delayed in payments to your mortgages and there is no relief in sight, in the immediate or near future, then you have to put the problem in perspective and make a contingency plan or efforts.
The standard measure of keeping or selling the property is that if your monthly house payment (including property taxes and insurance) does not exceed 40% of your gross monthly income, it should be possible for you to keep the property. If the payment is greater than 40% of your gross monthly income, consider selling or transferring the property to avoid negative impacts on your credit. This option would more likely be the path to be taken by borrowers who have equity in the property. By selling the property, the borrower could then pay off the mortgage, and pocket the difference if there is equity remaining.
If the financial setback is temporary and you need immediate money to make your loan current so that you could continue paying your debts, it is best to approach family and friends instead of hard money loans since they would lend money based on equity in the property. Just make sure to pay off your loans to your relatives or close friends for it is much difficult to have them foreclose on you to get their money back.
The best and simple solution to foreclosure proceedings is to deal directly with the situation. Be brave enough to talk with your banks or lenders and explain your situation. Remember, they do not want to foreclose on you they just simply want their money back plus interest. By exploring this angle, the lender and the borrower may arrive at a common ground to work on and resolve the situation in a way that is agreeable to both parties. The Loss Mitigation Department would deal on cases like this.
Basic lending guidelines would require all home loans would total up to less than 70% of the current market value of the property. If you have more equity than that, you should have no
difficulty
in obtaining a new refinancing deals or second trust deed to bring
your loan current. Expect higher interest rates and loan fees.
There
are several other alternatives available to you depending on the situations
of the borrower, laws of the state and policies of the lender. You
may consider forbearance, refinancing, modification, deferral of principal,
a temporary indulgence and a Chapter 13 Bankruptcy.
In applying
forbearance, your lender may be able to arrange a repayment plan based
on your financial situation and may even provide for a temporary reduction
or suspension of your payments. You may qualify for this if you have
recently experienced a reduction in income or an increase in living
expenses. You must furnish information to your lender that there is
a temporary problem and it would be resolved in the near future and
show that you would be able to meet the requirements of the new payment
plan.
A similar portion is deferral of principal in which the
borrower agrees to pay the interest only for a certain period of time
and then making the usual monthly payments. But just like in forbearance,
this is very difficult to obtain unless the bank is familiar with the
borrower or the borrower has an excellent credit stature in the bank.
If
you have recovered from a financial problem you may able to apply for
a mortgage modification. This process involves renegotiating the terms
of debt and/or extends the term of your mortgage loans, changing the
interest rates or additional surcharges to the principal with the current
lender. This may help you catch up by reducing the monthly payments
to a more affordable level. Refinancing, on the other hand, means that
the borrower obtains a new mortgage with a different lender; the operative
word here is different. As much as possible this alternative should
be avoided since it would make your problems worse for borrowers in
distress would tend to agree to onerous terms just to get a lease on
their loans.
A chapter 13 Bankruptcy could be another option
for it gives the borrower the time to “re-organize” his finances and
work out a payment plan prior to resumption of payment. This would
help keep the property and not blemish your credit rating compared
to a Chapter 7 Bankruptcy, which completely discharges any debt the
borrower had accumulated under the mortgage.
As a last resort,
you may able to voluntarily “give back” your property to the lender
or a “deed in lieu of foreclosure.” This would not save your house,
but it is not as damaging to your credit rating as a foreclosure. This
may be availed of if the borrower is in default and do not qualify
for any other options and your attempts at selling the house before foreclosures were unsuccessful.
In some other states, there are laws and
other options that are available to borrowers with mortgage problems. There is
the option of reinstatement which means that the borrower brings the foreclosed
mortgage current, including all overdue amounts, as well as fees and costs. Likewise,
there is the co-called redemption, however it is usually limited in how often
he or she could take advantage of this option and this is limited to some states.
A
foreclosure procedure takes a long time to materialize and homeowners are given
the chance to bail themselves out of their predicament. Sometimes the best defense
against foreclosure is just to make a response on their inquiries or demand letters.
Ultimately, the only thing that would stop foreclosure proceedings is repayment
of the debt, for every option mentioned here is just a delay in the proceedings.
|