Get A Little Foreclosure Assistance

Home foreclosure is one of the worst nightmares for any house owner. So if you think that you might be facing foreclosure, you’d be well urged to consider the measures you can take to prevent foreclosure.

Firstly, a quick overview of the foreclosure process. It begins when you fall behind in your mortgage repayments. Because your bank (or other lender) loaned you a large amount of money to buy your home, with your home as security, the bank has the right to sell the property if you fail to meet your loan repayments. So, if you do fall behind, the bank is likely to send you a notice stating that they are commencing foreclosure proceedings. Unless you take steps to avoid foreclosure from happening, the bank will proceed to sell the property at a public auction or trustee sale. You will lose your home and may still end up owing the bank money.

It’s vital that you be alert to the signals that foreclosure may be on the horizon. The first sign is if you are struggling to meet your mortgage repayments. This indicates a problem with your financial management, and unless you do something about it, you may find it more and more difficult to meet your repayments. All it takes is one unexpected bill - e.g. repairs for a car break-down or a surprise tax liability - to send you into arrears. If you can’t get back on track AND pay the amount in arrears, you can expect to receive a notice of default and the beginning of foreclosure proceedings.

If you can’t meet one or more mortgage repayments, or can only do so after borrowing from family or taking other such measures, it’s essential that you re-evaluate your financial situation. You may need to reign in some of your spending habits. And seriously look at selling off valuables you no longer need. Doing this may (a) give you an amount of savings you can draw on in the future in case you need emergency cash; and (b) enable you to continue meeting your mortgage obligations.

Nevertheless, if your current financial hardship isn’t likely to be temporary, you have nothing to gain - and a home to lose - if you don’t face facts. If you want to prevent foreclosure, it’s essential that you contact your lender as soon as possible in order to discuss you situation.

Be co-operative with your lender and open to ideas about how you might retain your mortgage. Your lender may work with you to come up with a new budget, and suggest some options for enabling you to keep your home. These options may include:

1. Accepting an alternative repayment plan.

2. Forgiving a payment.

3. Allowing you to meet the unpaid amounts by adding extra amounts to you current repayments until the outstanding amounts are paid.

4. Changing the terms of the loan agreement - e.g. by adjusting the interest rate, extending the term (and reducing the sum of the repayments), etc.

5. Refinancing the loan i.e. increasing the balance of your loan to include the unpaid amounts, and re-amortizing the loan.

6. Issuing a separate loan to cover the unpaid amounts.

In the case where none of these choices is available to help you get out of foreclosure, you should still co-operate during the foreclosure process. Whatever you do, don’t ignore the legal notices sent to you. Doing so may jeopardize your chances, however slim, of keeping your home.

It’s crucial that you become intimately aware of your rights and obligations during this time. Remember, for instance, that you have a certain period of time in which to pay back the outstanding repayments before your house is foreclosed.

Even if you are likely to lose your home, that doesn’t mean it has to be foreclosed. If you are able to sell the property, for example, that will stop the foreclosure. In fact, here are a few remaining ways to get out of foreclosure:

1. Sell the property - this may be your best strategy, especially if the value of the property exceeds the loan.

2. Agree to a short sale - a short sale is where you sell the home for less than the value of the loan. You will need the lender’s agreement to this.

3. Deed the property to the lender - you sign a deed-in-lieu of foreclosure, under which you give the lender a notarized deed, and the lender forgives the mortgage. This cancels the foreclosure, although it may still affect your ability to obtain credit in the future.

None of these options may seem all that appealing, but they are still ways to get out of foreclosure. If you are going to lose your home in either case, selling it on your own terms may be much more preferable than having the property foreclosed.