Stopping a Foreclosure Once It Starts

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Sat, Mar 28 - 6:35 pm EDT | 6 years ago by
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2539334956_87cef7e457Right now, there is a lot of talk about foreclosure. Naturally, it is best if you can avoid foreclosure to begin with. Talking to your mortgage lender when you think you are in trouble and working to avoid missed payments is the best way to proceed. But in some cases a foreclosure notice is served, and the process begins before you can really take the steps needed to prevent foreclosure.

It is possible to stop foreclosure once it starts, but it can be difficult. You will have time, however: In most states, the foreclosure process takes between 90 and 180 days, giving you some time to try and save your home before you are evicted. Check your state laws to see how long the foreclosure process lasts, and figure out a plan of action that might help you save your home. Remember: If you have to let something slide, it’s better to miss payments on unsecured debt rather than put your home at risk.

Option #1: Refinance the house

If you have 60% to 70% equity in your home, it is sometimes possible to refinance your home. Your mortgage, plus the missed payment amount, is paid to the bank by the refinancing institution. This requires specialty financing, and can be expensive in terms of fees in some cases. And it can be difficult in this climate to find someone willing to refinance your home.

Option #2: Pay the amount you are in arrears

Your next option is to make up all of your missed mortgage payments. This can be a daunting task. Many banks require an “all or nothing” payment to make up the entire amount you owe. Additionally, it can be even more difficult because you will have to make your current month’s mortgage payment on top of what you are behind with.

Option #3: Payment plan for the amount you owe

Another options is to negotiate a payment plan for the amount you owe. You can get a third-party to help you with this. If you can scrape together a partial payment for what you owe, you can — in some cases — arrange with your mortgage lender to set up a payment plan to cover the rest. This payment plan can be separate from your regular mortgage payment, or it can be added to your mortgage payment as part of a loan modification that extends the term length of your mortgage loan. Missing a payment under such a plan, however, can result in immediate resumption of the foreclosure process.

Option #4: Declare bankruptcy

Bankruptcy should always be the option of last resort. However, there are cases in which you can save your home by going through Chapter 13 bankruptcy — if you qualify, and if only in certain cases. Chapter 7 bankruptcy can delay a foreclosure, but you will still need to save up your money to save the house.

Look at your options and try to work with your mortgage lender and/or mortgage servicer in order to work out an agreement. Unfortunately, because loan modification or stopping foreclosure is voluntary on the part of the mortgage lender, you might not be able to do anything. But you can learn more about your options — and improve your chances of success — by visiting the HUD Web site and getting a list of approved foreclosure counselors in your state.

image source: respres via Flickr

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  • http://www.learnrealestateinvestmentproperty.com Robert

    Once the seller is in formal default, how are the processing, legal etc. determined. I can appreciate that some fees are set by the agency involved. How about legal fees? Is there a range? How could one find out if there is a range? Thanks.

  • Miranda Marquit

    It depends on who you talk to. Some agencies will help you for free. If you get a lawyer involved, it can cost between $100 and $500 per hour — or more. The best way to do it is to shop around to find the best price. Look out for those who charge large up-front fees, however.

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  • http://blog.dodeals.com/ Real Estate Investing Resource

    It makes sense investing in real estate during depression since prices are falling but you should be very attentive to know when the prices hit the bottom, you might miss the ride.. You can park the properties and sell it later for a good price and remember “millionaires are made during economy depression!”.

  • http://foreclosurezine.com Bob

    This is quite helpful and I will see that I can implement that. I really hope that this will save my home.

  • http://www.foreclosurezine.com stop foreclosure, foreclosure help, avoid foreclosure, loan modification, foreclosure advice

    It depends on who you talk to. Some agencies will help you for free. If you get a lawyer involved, it can cost between $100 and $500 per hour — or more. The best way to do it is to shop around to find the best price. Look out for those who charge large up-front fees, however.

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  • Miranda Marquit

    You make a good point about millionaires. And some of the best companies started during recessions. It’s all about opportunity — and being prepared to take it when it comes along.

  • Miranda Marquit

    I hope that it has helped, and good luck with your home.