subject: House Foreclosure Prevention Strategies [print this page] House Foreclosure Prevention Strategies House Foreclosure Prevention Strategies
Receiving notice of house foreclosure is a heart stopping experience. No one wants to lose their most valuable asset, but in order to prevent the bank from repossessing your home it is crucial to be proactive in contacting your mortgage lender.
Banks can stop house foreclosure proceedings if a payment plan can be worked out. This might include entering into a deferred payment agreement, forbearance plan, loan modification, or mortgage refinance.
Homeowners are aware of pending foreclosure long before a Lis Pendens is filed. Banks always issue a Notice of Default and give borrowers opportunity to rectify the situation before filing legal documents.
Borrowers should be proactive from the moment they realize they cannot remit a house payment. Unfortunately, many people become frozen with fear and avoid contacting their bank's loss mitigation department.
Loss mitigators are bank employees who specialize in helping borrowers struggling to maintain loan installments. These employees are often overworked, so making phone contact is sometimes challenging. However, homeowners must be persistent. If they leave several messages that go unanswered it is time to send a letter to the bank requesting a meeting.
Letters should be sent via certified mail with a return receipt request or via courier services. It is crucial to obtain verification the bank did receive the letter. Sometimes, a visit to the bank is required. It's important to do whatever it takes to obtain a meeting, even if it means taking time off work.
Borrowers who have become delinquent with payments may find it beneficial to obtain housing counseling through the Department of Housing and Urban Development. HUD provides complimentary counseling services and can help borrowers make contact with their lender.
Once contact is made, borrowers are assigned to a bank loss mitigator who will work with them throughout the process. Banks assess borrowers' financial status to determine which home-saving solutions can be offered.
Decisions are based on previous payment history; number of delinquent payments; appraised property value; loan balance; and borrowers' ability to make future payments.
Loan modification is one of the most common solutions. This strategy involves lowering interest rates or principal balances. Banks usually reduce interest, but some lenders will sometimes reduce principal amounts when borrowers owe considerably more than the appraised value.
One option for obtaining assistance with house foreclosure is Making Home Affordable. This program is sponsored by the U.S. government and can help borrowers obtain help in a more expedient fashion. Participating mortgage lenders are required by law to respond to borrowers request for foreclosure assistance within 30 days after filing their claim.
When borrowers cannot afford to stay in their home they may qualify for assistance under Making Home Affordable 'Exit Gracefully' program. Options include real estate short sales and deed in lieu of foreclosure. Qualified applicants can receive up to $3000 in relocation assistance money and walk away from their property without owing additional funds.
Real estate short sales involve selling the property for less than owed on the mortgage note. Deed in lieu of foreclosure requires borrowers to return their house to the bank. These options won't stop house foreclosure, but can minimize financial consequences and give borrowers the opportunity to be released from mortgage obligations.
