12 STEPS TO HELP STOP A FORECLOSURE, OTHER THAN THE OBVIOUS OF SELLING THE HOUSE OR REFINANCING, YOU MUST WORK WITH THE LENDING COMPANY, CALL THEM TODAY TO PROTECT THE BIGGEST FINANCIAL PURCHASE OF YOUR LIFE. There are several methods that homeowners in financial distress can use to stop foreclosure fast. Some methods require money, while others require agreement to forgo money by the lender or through the court system. While lenders are typically NOT required to modify loan arrangements, many will. The usual choices include:
1). A deed in lieu of foreclosure: In this situation the lender accepts the return of your title. "But be aware that the lender may not have to accept your title, Also, in many states a lender may sue for any loss, ding your credit report and report any uncollected loss to the IRS as taxable income to you."
2). Claim advance: If you bought with less than 20 percent down then either the loan is self-insured by the lender or you have private mortgage insurance (PMI). In some cases PMI companies will provide a cash advance to bring the loan current — money which is sometimes interest free and need not be repaid for several years.
3). Disasters: Most lenders, but not all, will provide substantial relief in the face of hurricanes, earthquakes and other terrible events. Typical measures include a suspension of late fees, no late payment reports to credit bureaus, a pause in foreclosure actions and modified payment schedules. To get such benefits you must contact the lender as soon as possible after the disaster.
4). FHA loans: If you financed with a loan guaranteed by the Federal Housing Administration, call 1-800-569-4287 or 1-800-877-8339 (TDD) to reach a HUD-approved housing counseling agency for assistance and advice.
5). Forbearance: This is a temporary change in mortgage terms, such as the right to skip a payment or make smaller payments for a year or less.
6). Modification: "This option should be considered when the borrower experiences difficulty making regular mortgage payments as a result of a permanent or long-term financial hardship". "Reducing an above-market interest rate to a market rate and/or by extending the original terms of the note may enable the borrower to continue making payments. Permanent interest rate reductions appeal most to borrowers, but even a temporary rate reduction of one to three years can provide substantial help."
7). Private mortgage insurers. Mortgage insurance companies typically require lenders to begin foreclosure proceedings once a delinquency reaches 150 days or when a sixth missed payment is due. However, such requirements may be waived in areas impacted by natural disasters and for other reasons.
8). Re-amortization: In this case your missed payment is added to the loan balance. This brings your account current, however since your debt has increased, future monthly payments may be larger unless the lender agrees to lengthen the loan term.
9). Refunding. If you have a loan backed by the Department of Veterans Affairs, the VA may buy the loan from your lender and take over the servicing. If you have the ability to make mortgage payments, but your loan holder has decided it cannot extend further forbearance or a repayment plan, you may qualify for refunding, according to the VA.
10). Reinstatement: Imagine you missed two or three monthly payments. With a reinstatement, or what is also known as a "temporary indulgence," you bring your loan current, pay late fees and other costs, and the loan continues as before.
11). Repayment plans: Say you must miss a payment and that each payment is $1,000. With a repayment plan you might pay $1,075 a month until the missing money is repaid.
12). Short sale: An arrangement where the lender accepts less than the mortgage debt in satisfaction for the entire loan amount. Also called a "compromise agreement" with VA loans. Be cautious, in some instances money not repaid may be regarded as taxable income. Also, lenders in some cases may sue to recover any shortfall.
Research for this article by
Sarasota Private Investigator Bill Warner
