Stopping
Foreclosure, How to Stop Foreclosure
5 Ways to Avoid Foreclosure
By
Carla Ghosn
In light of the current housing market crisis facing America, the word
"foreclosure" represents a very real threat and risk that is breathing
down the necks of millions of Americans. It seems there are few people who
do not personally know someone who has lost their home, and foreclosure
statistics are presently nothing short of alarming.
You do not have to be helpless if you are a homeowner struggling to
maintain ownership of your home. A number of options are available to you
as you explore avenues to avoid having your home being foreclosed on.
Here are 5 ways to avoid foreclosure:
1. Loan Modification -- Loan modification refers to
the restructuring of a mortgage so that the monthly payments are lower and
easier to cope with. The good things about loan modification are that your
new mortgage payment results in a monthly financial commitment that is
less burdensome than the pre-modification amount; it involves no fees
(attorney and closing fees for instance); the homeowners credit rating is
not damaged (unless you stop making your mortgage payment prior to getting
the modification); and it can often result in a decrease in the amount of
interest that is associated with the loan amount. On the downside, the
loan term is typically extended, and a modification cannot be used to
increase the size of the loan amount, as in the case of refinancing.
2. Short sales -- In simple terms, a short sale refers
to a situation in which a home is sold at a price that is less than its
face value. The primary advantage of a short sale is that it is a lot less
damaging on one's credit than in the case of foreclosure, and in many
cases credit reports reflect short sales transactions simply as
settlements on accounts. Some credit professionals estimate that a
foreclosure can adversely affect a homeowner's rating by 200 points more
than a short sale. Another positive associated with short sales is the
fact that homeowners are able to part with their homes with a lot more
dignity as compared to the foreclosure process.
The potential negative things to be mindful of regarding short sales
are the fact that the IRS regards as taxable any portion of the loan that
is written off by the lender. Check the Mortgage Debt Relief Act of 2007
that would allow you to exclude income from the discharge of debt on your
primary residence. Also, you need to be sure that your lender does not
come after you at a later stage for the balance of your loan that was not
covered by the sale of your house; please make sure to get a deficiency
waiver from your lender. Working with an experienced and professional
short sales negotiator can help you avoid these situations with your bank
and the IRS.
3. Deed-in-lieu of Foreclosure -- A deed in lieu of
foreclosure is a deed instrument through which a homeowner conveys all
interest in a property to the bank/lender in order to satisfy a loan that
is in default and prevent foreclosure from taking place. It essentially
amounts to giving the home back to the bank and making no further payments
on it. This option immediately releases the homeowner from any outstanding
loan amount that is applicable. The homeowner is also able to prevent the
public embarrassment that is so often associated with administration
proceedings. After a deed-in-lieu-of-foreclosure, the borrower has the
option of purchasing another home in the future.
4. Filing Bankruptcy -- The most obvious drawback of
filing for bankruptcy is the devastating effect it can have on your credit
rating. It can often mean that a person's credit is ruined for as long as
7-10 years. In addition, it is not guaranteed that all the debt will be
erased, it is a cause of major embarrassment, and it means that it becomes
practically impossible to buy a home again for quite some time. Despite
the damaging consequences related to filing for bankruptcy, it does bring
an end to the harassing phone calls and potential lawsuits, and allows the
person to begin the lengthy process of rebuilding their credit in peace.
State laws vary, but some property such as cars up to a certain value,
some furniture and clothing items, life insurance, and portions of earned
wages cannot be taken by the lender after bankruptcy is filed.
5. Repayment option or payment forbearance plan --
This is an agreement entered into between the homeowner and lender whereby
a mortgage loan that is at least 3 months in arrears can be reinstated. A
written payment plan is set up, and the period in which the loan payments
may be allowed to fall behind cannot exceed 12 months. The gist of this
arrangement is that mortgage payments are suspended for a period of time,
allowing the struggling homeowner some time to reorder his/her finances,
to resume with payments at a future determined date, and to avoid
foreclosure proceedings. The nature of the mortgage loan does not change;
the loan term is simply extended by the amount of months that payments are
suspended.
If you find yourself struggling to cope with the demands of your
mortgage during the tough economic and housing market conditions that are
currently prevailing in the United States, there are options at your
disposal. Foreclosure does not have to be a forgone conclusion.
Should loan modification be of interest to you, please visit
www.mycaal.com.
Carla Ghosn
CEO & Founder of Caal (mycaal.com).
Caal loan modification
software
Article Source:
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Tips on Avoiding Foreclosure
By
Teisha N Powell
Having your dream home foreclosed is a harrowing experience. But at
times, your financial situation is so poor that it is impossible for you
to meet your obligations even after the due dates. When the letters and
phone calls start coming in fast and furious from your creditors, it seems
inevitable that your home will indeed be foreclosed. However, this is not
always so. If you have been falling behind payments and you fear
foreclosure, here are a few helpful tips on avoiding foreclosure.
Never Avoid Communicating with Creditors
A common mistake made by many borrowers who have overdue payments is to
avoid creditors. You may have received a letter from the creditor asking
you to contact them or they may be trying to reach you over phone. If so,
contact the lender immediately. Present your problem to him clearly and
discuss if there are any options he can offer by way of modified repayment
terms. Remember that the lender is more interested in retaining you as a
borrower rather than enter the complex and often time- consuming
foreclosure process. If you indicate that you are willing to repay the
loan fully, provided easier mortgage terms are offered, he may well agree.
Voluntarily discussion from your side tells the lender that you are making
every effort to fulfill your commitments.
Start Early and Explore Options
Even before you start receiving payment notices from your lender you
can start exploring the various options that you may have. Discuss loan
modification with your lender even before he initiates communication about
your delayed payments. For accurate and objective information you can also
talk to a U.S. department of Housing and Urban Development counselor. He/
she can clearly elucidate your various options and explain your rights as
a borrower. This knowledge is very helpful in knowing exactly what your
lender can or cannot do to recover his loan from you.
Prioritize your Mortgage
Your home is your single most valuable asset. If you find yourself
lagging behind mortgage payments, it is time to revamp your financial
life. Prioritize your home payments and put everything else on the back
burner. Cutting back optional expenses like TV, one of two cars, club
memberships etc can often give you a little extra savings each month. This
can go towards your mortgage repayment. Even a marginal improvement in
your repayment shows the lender that you are serious about fulfilling your
mortgage commitments. This puts you in a strong position when you want to
negotiate easier repayment terms with him.
Taking the right action at the right time often helps avoid
foreclosure. Many a time, you can even work out a modified repayment
schedule with your lender that is reasonably manageable. By fulfilling the
commitments of your new modified plan you avoid the foreclosure and get to
keep your dream home.
Teisha Powell is a
Foreclosure attorney Florida, with years of experience in handling
foreclosure defense Florida and bankruptcy issues.
Article Source:
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http://EzineArticles.com/?Tips-on-Avoiding-Foreclosure&id=6304534
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