Stop Home Foreclosure Before the Foreclosure
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
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
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
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.
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
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