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Stop Home Foreclosure Before the Foreclosure Process starts

Article By: Tanu Javeri

With planning, you can stop home foreclosure proceeding and save your home. There are many reasons why you may fall behind in your loan payments from a loss of a job, medical expenses and other life-altering occurrences. However, if one neglects paying his / her credit cards it hurts our credit rating, but when one neglects home loan payments and could face foreclose, lose the ownership of his / her home. Solutions are possible, but be prepared to work with and stay in contact with the lender.

Rule #1: Contact your lender as soon as you know your payments will be late. Call the lender and request to talk with the "loss mitigation" or "workout" department. These departments have the responsibility to see if you qualify for a workout program that is currently available for FHA, VA and some conventional residential mortgage loans.

Rule #2: Never ignore the lender's letters or phone calls. The lender will probably ask you to fill out documents that describe your financial situation. They will review and analyze the documents before offering a solution to bring your loan up-to-date. If the lender sends you a packet, turn it around quickly and answer all questions honestly.

Rule #3: Never assume your situation is hopeless. Working with your lender can stop foreclosure. Lenders do not want to foreclose if it can be avoided. But they would surely want to make sure you can follow-through on any promises you make to bring your account current.

Rule #4: Be prepared to share all details about your financial situation with your lender.
• An explanation of your current financial circumstances.
• Details about your current income, including pay stubs, statements regarding unemployment, disability, social security, retirement, public aid, or other similar documents.
• A list of your household expenses.

There isn't much you can do to stop foreclosure on your home once the ball starts rolling. When you fall behind with your payments, your mortgage company is responsible for contacting you, to determine the reason for the delinquency and attempt to make arrangements to cure the delinquency. If the problem can not be resolved by the time you are three payments past due, the mortgage company is required to notify VA that your loan is in default. After this notice is received, VA will attempt to contact you to discuss your current situation and help you determine the best course of action.

Most foreclosures result in losses to everyone involved, the veteran, the Mortgage Company, and VA. Many foreclosures can be avoided, particularly when all parties work together. If you let the house go into foreclosure, a notice of the home foreclosure can remain on your credit bureau file for 7 years. Only through time can a foreclosure be removed from a person's credit bureau file. There is nothing you can do to have this foreclosure removed before the 7 year time frame.

Take Steps to Stop Home Foreclosure and Save Your Home
Solutions for Temporary Problems

• Reinstatement
When you are behind in your payments but can promise a lump sum to bring payments current by a specific date. Under most circumstances, lenders are required to accept payment of the full delinquency and reinstate the loan. The delinquency may include certain legal costs if you are already in foreclosure. Many lenders require certified funds for reinstatement.

• Forbearance
You are allowed to delay payments for a short period, with the understanding that another option will be used afterwards to bring the account current. Lenders sometimes combine Forbearance with Reinstatement if you know you'll have the funds to bring your account current by a specific date.

• A Repayment Plan
If your account is past due, but you can now make payments, the lender may agree to let you catch up by adding a portion of the past due amount to each current monthly payment until your account is current.
Solutions for Longer-Term Problems

• Mortgage Modification
If you can make your regular payment now, but cannot catch-up the past due amount or make payments at the former level. The lender might agree to modify your mortgage. One solution could be to add the past due amount into your existing loan, financing it over a long term or you could extend the length of your loan (or take other steps to reduce your payments).

• Selling Your Home
Incase catching up or any payment method thereafter is not a possibility; you can work with your lender to put foreclosure on hold to give you some time to attempt to sell your home. Though it is going to be difficult to sell your home while in foreclosure as once the public learns that your property is in foreclosure, you won't likely receive a decent offer because buyers will be trying to take advantage of your situation. You may be required to act fast.

• Deed in Lieu of Foreclosure
The borrower transfers deed to their property to the lender in lieu of foreclosure. This enables you to avoid adverse consequences associated with foreclosure. It does have a negative impact on your credit record, but not as much as a foreclosure. The lender might require that you attempt to sell the house for a specific time period before agreeing to this option, and it might not be possible if there are other liens against the home.

• For FHA Loans
The lender might be able to help you receive a one-time payment from the FHA Insurance fund. Your loan must be at least 4 months but no more than 12 months past due and you must show you are able to begin making full mortgage payments. You must sign a promissory note which allows HUD to place a lien on your property for the amount received from the fund. The note is interest free, but must eventually be repaid. The note becomes due when you pay off the loan or when you sell the property.

• Preserving Your Good Credit
If your home loan is past due, your other obligations probably are too. A nonprofit credit counseling agency might be able to help you work with your creditors to reduce your monthly payments by lowering interest rates or extending repayment periods. Avoid any company that promises you quick fix for all of your credit problems especially if you pay them a large fee.

About the Author
Tanu Javeri, a stay-at-home mother, is a freelance writer with many years of experience. She has written articles addressing a range of subjects from finance to international travel to beauty & health care. She was formerly a business journalist and a Senior Research Executive at AC Nielsen. She has gained knowledge on international markets by the exposure she got from residing in India, Africa and USA. She is a knowledgeable writer in mortgages, home equity lines of credit, private mortgages, and is a contributor to www.super-mortgages.com.