Stopping Foreclosure |
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Homeowners who have failed, for one reason or another, to maintain the payment obligations of their loans, and are found in default on their loans, have a number of options available to them to stop the foreclosure process. Bring the loan currentThe best possible resolution for homeowners in default, is to reinstate the loan by bringing payments current, and paying all past due amounts. Sell the propertyA traditional sale of the property, in which the asking price covers the costs of the entire loan in default, would stop the foreclosure and eliminate the obligation of the homeowner to make monthly payments, by providing a payment in the full amount of the loan. Another option, should a conventional sale fail, is a short sale; this is the sale of the house, under agreed upon terms with all lien holders, to sell the property and settle the debts for less than the amount owed. Short sales can be difficult for properties with significant negative equity. Refinance the propertyRefinancing a property with more reasonable monthly payments and interests rates could potentially permit the homeowner to remain in the home, by paying off the current default obligation with the newly refinanced obligation. Work with the lender
Sue the lenderWhile it is often a good idea to have an attorney review loan documents for problems, and to help negotiate better loan modification terms; lawsuits are expensive and likely beyond the reach of most homeowners, unless working together in a class action suit. BankruptcyBankruptcy really only delays foreclosure. While Congress is considering allowing judges to modify loan terms, they currently cannot. As such, if the owner fundamentally can't afford to make payments, the judge will likely have to grant the lender a motion allowing them to continue the foreclosure. This option should therefore be used carefully, as it impacts your credit for 10 years, versus 7 years for a foreclosure alone. |
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Courtesy of Sonata Realty |
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