How To Avoid Foreclosure

With so much buzz going around about the trials and tribulations of the mortgage industry there are bound to be some of our readers that this blog may very well hit close to home with…

The 93% increase in nationwide foreclosure filings since July 2006 is the latest sign that home-owners are having trouble making payments and finding buyers during this market slump. According to RealtyTrac Inc., Tennessee reported 3,526 filings including default notices, bank repossessions, and auction sale notices, a 5% increase from June. Nevada logged in 5,116 filings for July making it the highest ranking foreclosure state in the country for the month. Borrowers with sub prime loans and adjustable-rate mortgages are being hit the hardest, but there is a small window of opportunity, usually between 4 to 6 months, to develop and implement a plan to stop foreclosure.

If foreclosure is something you may be faced with, read below. There is help… and there are options. Listed below are ways to be proactive about your impending situation:

1. Avoid denial. Communicate with your lender and document in writing, the steps that are being taken to correct the problem, and understand that your lender would rather you pay the note than let it go to auction. The lender is usually taking a loss when the house gets foreclosed on because of the eviction process, attorney’s fees, delays from borrower bankruptcy, costs associated with resale, and possible damage to the property.

2. Offer financial information, such as monthly income and expenses and negotiate a payment plan. The mortgage company should be able to rearrange a payment plan based upon your current situation because once again they would much rather see you keep the house especially in this down market.

3. Consider refinancing the loan. Not only may you get a better rate, but you will be able to pay off the lender and get caught back up sometimes with lower payments and/or reducing your credit card or other debt.
4. Inquire about a Partial Claim. A Partial Claim is an interest free loan issued from HUD paid to your lender in the necessary amount to get the mortgage up to date. A lien will then be placed on your property until the Promissory Note is paid in full. The Note does not have to be paid until the mortgage matures or you sell or leave the property. Talk to a mortgage professional about this option.

5. Hire a realtor with Short Sale experience and sell the property out right. Such experience could benefit you, especially if the Realtor can negotiate the payoff with the lender and get the buyer to pay your closing costs. If it’s done right, you would walk away from a potential financial disaster without having to come out of pocket with anything and it once again keeps you out of foreclosure. There are some possible downfalls to Short Sales so look for a blog post regarding this soon.

6. Look into filing for bankruptcy if all other options fail. This temporarily stops your property from going to auction and can buy you a little more time while you seek other avenues.

Beware of people who will try to take advantage of your financial situation. After all, this information is public knowledge and if someone is offering you something that sounds too good to be true, then it probably is.