Today's economic instability and worldwide downturn has resulted in many job losses amongst other things. This in turn has helped to create a situation in which many people are unable to pay their mortgage repayments on time. This has resulted in a huge increase in property foreclosures. Homeowners in this situation should not despair.
There are steps that can be taken in order to delay and ultimately stop the foreclosure. There are a variety of options that can be looked at in order to save the homeowners house. Not every option may be applicable to everyone. Some solutions may be more viable than others depending on the individual homeowner's situation. The important thing is that there are various different ways to stop foreclosure.
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Step one would be to contact your bank and ask them to postpone the auction of the house, if the judgment for foreclosure, has already been issued. Most banks are willing to give homeowners an extension e.g. one month, if written proof can be provided that the homeowner is working on a long term solution that would allow them to keep the house.
Banks have the power to stop an auction sale at any point of time, even a few hours before the auction is to take place.
Step two would be to go through the various options available to stop the foreclosure. This would involve speaking to your bank/mortgage company to:
1. Temporarily reduce or waive payments.
2. Add the unpaid amounts to the principal of your loan and thus increasing your monthly repayments to cover the unpaid amounts.
3. Mortgage modification would be the homeowner's ideal solution. But because of the economic turmoil many banks may not be willing to provide this to anyone but the most qualified candidates.
4. Loan refinancing. Lenders are no longer providing any credit to people without perfect payment histories and verifiable income, which may leave many borrowers out of the traditional lending system.
Instead foreclosure loan companies may be able to provide homeowners with the necessary funds to build a bridge from a short term financial crisis to long term recovery. Also if the homeowner's mortgage is insured by the Federal Housing Agency (FHA), they may qualify for an interest-free (and payment-free) loan to get their mortgage current. In addition this money doesn't need to be paid back until the mortgage is paid or the house is sold.
Step three would be to sell the house. Here too, you have two options. One would be to sell though the conventional method of using Real Estate Agents or to sell to a Real Estate Investor. Selling through a Real Estate Agents will yield higher profits but may take time. Whereas selling to a Real Estate Investor provides the homeowner with a quick sale at a lower price. This would be a much better option than having a bank foreclosure, which would affect your credit rating. The absolute last step for the homeowner would be to hire a personal bankruptcy attorney, who would file for a Chapter 7 or Chapter 13 on behalf of the homeowner- which is filing for bankruptcy.
The attorney would advise the homeowner which form of bankruptcy would be most suitable and what the resultant consequences would be. Once bankruptcy is filed the bank can no longer foreclose the house until all the legal procedures have gone through. This would give the homeowner time to sort out their finances and come up with a long term solution.
Homeowners can use several options to stop their home foreclosure. It is essential that they use all the means available to ensure their home remains theirs.
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