There are various reasons; a house ends up in foreclosure. Divorce, sudden illness, death, job loss, and unfavorable conditions make it challenging to keep up with mortgage payments. In this article, we’ll discuss strategies to stop foreclosure because of missed payments or financial struggles.
Step by Step Process to Stop Foreclosure Now
Are you experiencing a sudden shift in your income?
Get in touch with your loan servicer. According to federal law, the bank cannot foreclose your house until 120 days have passed without payment. You can use this time to stop foreclosure on your home.
You’ll need a documented proof or a hardship letter. Depending on the circumstances, your mortgage servicer can suspend your payments for a while. The pending installments can be later paid as a lump sum, or your lender can apply them to monthly payments. Mortgage forbearance is a great option if you haven’t yet missed a mortgage payment.
After 120 days, the bank can foreclose your house without delay. Before this stage comes, it might be a better option to sell your home for cash. Click here to see how this option works.
Loan Modification Programs
As a part of the process, you’ll hear from the loss mitigation department. Modifying your mortgage is a possible way to stop foreclosure.
Your mortgage servicer can reduce your monthly installments by increasing the repayment period. Doing so won’t reduce the debt, but for now, mortgage payments will become affordable.
There is no guarantee that the bank will approve your loan modification application. While your application is getting approved, the bank can continue to foreclose your house. It is critical to communicate earlier with the lender so you can consider other options.
You can bring your loan current by paying missing mortgage installments along with the late-payment fine. In most states of the US, you can reinstate your mortgage until 5 days before the foreclosure date. After that, the lender accelerates your loan, and you’ll have to pay the full loan amount to stop foreclosure.
Paying the mortgage has become a challenge. That’s why you are here. It is apparent that it was not possible to reinstate your mortgage. Still, we invite you to take a second look at your finances. You can take a second loan to bring your mortgage current. Selling a luxury item might be an option. An approved financial counselor can help you explore your options in this regard.
Deed in Lieu of Foreclosure
After 120 days, the lender can initiate the foreclosure process. Depending on the type of procedure (judicial/non-judicial), it can take a few weeks to a few months before the bank takes over the property. If you cannot come up with a plan, you can accept a deed in lieu of foreclosure.
It means you are voluntarily giving your home back to the bank. Lenders accept this solution because a foreclosure is an expensive choice. Deed in lieu of foreclosure will damage your credit score, but its effects are less severe compared to a foreclosure sale.
Bankruptcy chapter 13 can stop foreclosure in its tracks. The creditors must stop their attempts to collect payment. If the court approves your application, you can pay your debt in 3-5 years. A court appointed trustee will manage the transaction, and you’ll be able to keep your home. Please consult a HUD-approved counselor to see whether filing bankruptcy is a suitable option.
Sell Your Home Before Foreclosure
A foreclosure will remain on your credit report for seven years. Bank will hold a foreclosure auction to sell your home. You can avoid this situation by selling your home to a local real estate solutions company. A trusted firm can provide you with a much-needed solution. They can purchase your home as-is for a cash price. You’ll be free from debt, and your credit report will remain safe. If you need assistance, please visit this link or call us now to understand the process better.