Avoiding Foreclosure

Unforeseen and unexpected problems like a loss of a job, medical emergency, accidents death etc. can alter our lives completely leading to dire financial crisis. It may tend to disrupt our schedule of regular and monthly payments involving credit card bills, home loans etc. While the inability to pay credit card bills may only hurt our credit rating, not paying home loans can lead to foreclosure of our home.

If such a situation does arise call your mortgage company right away and avoid home foreclosure. Do not wait till it is too late; the longer you wait, the greater are your chances of losing your home and to stopping foreclosure. Your options to retain ownership of your home are most effective early, when you have missed only few payments behind. A mortgage company will be able to provide you with temporary financial relief by giving you respite through different alternatives listed below:

Forbearance

The lender may be able to arrange a repayment plan based on your financial situation and may even allow temporary reduction or suspension of your payments. You will have to furnish information of funds that will show the lender of your ability to meet the requirements of the new plan.

Reinstatement

Often combined with forbearance, in this you can pay the mortgage company the indebted total amount including missed payments, up front at a later pre-determined date.

Repayment Plan

A new agreement with a fixed time schedule that allows repayment of the missed payments owed along with regular monthly payments.

Loan Modification

A new written agreement that changes one or more of the original terms of your initial note to make the payments more affordable. This may include extending the term of the loan, adding missed payments to the existing loan balance, making an adjustable rate mortgage into a fixed rate mortgage.

In the event of an impending foreclosure, you can even contact a non-profit housing or credit-counseling agency that will assist you by analyzing your financial situation. They also can help you organize a budget to pay your mortgage and other monthly expenses–without your mortgage company's direct involvement. Finally, these agencies can help you find and take advantage of local services or programs that provide financial, legal, medical or other support.

If you feel that you cannot afford to keep your home, you can work with your mortgage company to avoid foreclosure through other alternatives. This will also help in reducing the negative effect on your creditworthiness.

Ways of avoiding foreclosure or stopping foreclosure:

• An assumption– A qualified buyer can take over your mortgage debt and pay the mortgage payments, even if the mortgage is non-assumable. This will allow you to sell your property and avoid foreclosure.
• Short pay-off – In the event that you are able to sell your house but acquire proceeds that are less than the total amount you own on your mortgage, the mortgage company may agree to a short pay-off and write off the balance mortgage.
• Deed-in-lieu of foreclosure - As a last resort, you may voluntarily transfer your property to the lender. This won't save your house, but in exchange you can cancel off your mortgage debt.

BEWARE!!!!!!!!!

While in the distressful situation, of possible foreclosure, you may encounter predatory lenders who will try to exploit your financial situation. They will pretend to be your saviours and offer loans with exorbitant interest rates, broker fees, additional and unnecessary costs and unaffordable repayment terms. Be wary of such scam artists and stay away from phoney credit counselling agencies. Steer clear of lenders that offer you quick and easy solutions to your problems, bargain loans and false promises. Avoid lenders who encourage you to borrow more than you need or more than the value of your home.

Anything that sounds too good to be true usually is! If you suspect a malicious and phoney mortgage company hounding you, call your local office of consumer affairs, the Federal Bureau of Investigation or an approved credit-counselling agency immediately.