Most of the population can only dream of having a home, with the successful purchase of a property being a turning point for many. But what happens when you get a foreclosure notice? Numerous homeowners may be tempted to give up their property. Fortunately, multiple solutions exist to protect your residence, as listed in this guide.
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File a Lawsuit
Not all foreclosures utilize court settlements, providing borrowers temporary relief to keep their homes. If your mortgage agreement uses a power of sale clause, your lender can typically initiate a foreclosure without going to court. This, however, gives you a chance to file a lawsuit, allowing you to slow down the real estate foreclosure process. That said, you will need to prove the following:
- The mortgage company made a significant error in the foreclosure process
- The lending company does not own a promissory note
- The lender omitted steps in the foreclosure process as required by law
- The mortgage company violated state laws
- The mortgage company did not heed the recommended state mediation requirements
Failure to prove this could leave you paying your lender’s legal fees with the foreclosure proceeding as intended.
Get a Loan Modification
Another option to help prevent foreclosure is applying for a loan modification. It allows you to alter your current terms to suit your standard of living, especially where loan refinancing is not viable. One way to do this is by lowering your monthly payments and extending the term of your loan. This gives you enough time to pay your mortgage and gives you peace of mind. It also allows you to lower your interest rate for an affordable mortgage.
Create a New Payment Plan With Your Lender
Temporary setbacks can happen anytime, with job loss often hindering your regular mortgage payments. If this happens, make it a point to reach out to your lender to help you work out a payment plan for the future. An ideal solution would be adjusting future payments to accommodate increments in your monthly plan. This sets a new repayment schedule in motion, allowing you to get back on track once you get financial relief.
Conduct a Short Sale
If the above options are not forthcoming, borrowers are also eligible for a short sale. This will require you to vacate your home, allowing you to sell it for less than what you owe on your loan. Your lenders will first need to approve this due to the substantial loss of proceeds from the initial mortgage. If approved, the revenue generated pays for part of the loan or as agreed by all parties.
Utilize a Mortgage Forbearance
A mortgage forbearance suspends your monthly payment for a stipulated time. After this, you will be required to repay the accrued amount and the regular monthly payments. The payments can be made either as a lump sum or through a new repayment plan. Note that this will only work when you have a new job prospect.
Request a Deed In Lieu Of Foreclosure
The last option to protect your home from foreclosure will require you to sign an agreement that releases you from your mortgage obligation. This is referred to as a deed in lieu of foreclosure. It allows you to avoid foreclosure by voluntarily handing over your home ownership to the mortgage company.
While a foreclosure can cause significant strain in your everyday life, the above are some ideal solutions that can help you protect your property from this process. Make it a point to contact your lender to provide alternatives such as a loan modification, short sale, and forbearance. Legal experts can also help you file a lawsuit and sign a deed in lieu of foreclosure as a last resort, so consider reaching out to professionals in this field.
