How to Deal with a Foreclosure

15 Jun How to Deal with a Foreclosure

What is Foreclosure?

Foreclosure is the process of taking possession of a mortgaged property as a result of the mortgagor’s failure to pay mortgage payments.

After you miss one or more mortgage payments, the process leading up to an actual sale of the foreclosed property can include a grace period, demand letters, notices of default, a recorded notice of foreclosure, publication of the debt, and a foreclosure auction or repossession by the lender.

How to Deal with a Foreclosure

Foreclosure has become a more common occurrence over the past 2 decades, with a record of 2.8 million properties were served with foreclosure notices in 2009. Despite how familiar we may be with foreclosure, receiving a notice on your own property can be alarming and stress provoking.  

However, a foreclosure notice doesn’t mean that you have run out of options. Many foreclosure counseling services estimate that at least half of these notices won’t result in a foreclosure on the property.  Many homeowners can find alternatives to foreclosure before they lose their property before they receive a notice to leave. Here’s some simple advice for dealing with a foreclosure:

1. Don’t give up. You can still avoid foreclosure after you miss a mortgage payment or receive a notice of default.
2. Get informed. Review your original mortgage paperwork and all of the correspondence you’ve received from your mortgage provider. Give them a call if you need clarification or are unsure about what your rights are. Research your state’s foreclosure laws.  Speak with a foreclosure avoidance counselor approved by the U.S. Department of Housing and Urban Development.
3. Weigh your options. Remember that the traditional foreclosure process is not the only way to remedy your mortgage default. Read more about these options below.

Three Alternatives to Foreclosure

Experts say that the majority of homeowners find alternatives to foreclosure by negotiating with their lenders, sometimes with the assistance of counselors. There are three commonly known ways you can avoid missed payments resulting in a foreclosure: forbearance, modification, or short sale.

Forbearance: A forbearance functions exactly as it sounds. You and your mortgage provider agree to temporarily decrease or suspend your monthly payments for a fixed period of time. This allows you time to deal with any short term financial issues you may be facing and resume timely payments.

Modification: If this is an option for you, you and your mortgage company will work together to  revise the original terms of your loan. This can include adjusting the payment amount, length of the mortgage, interest rate, or loan type. Usually the goal is to reduce the monthly payment amount so you can resume timely payments.

Short Sale: In a short sale, you sell your property to a third party for less than the amount due on the mortgage.  All of the proceeds from the sale will be paid to the mortgage lender and is a means paying down the mortgage loan and avoiding the full foreclosure process. Your lender may agree to forgive the balance of the loan (this is the law in some states) or they may seek a deficiency judgment requiring you to pay the balance owed on the mortgage. 

How Can Housale Help with a Foreclosure?

Housale helps you sell your property quickly at a fair price. We believe everyone should have the option to sell their home before they lose it to foreclosure.   Housale can help you eliminate spending on realtor or short sale services and maximize the proceeds you can use to pay down your mortgage. You can receive a fair offer from our expert real estate appraisers and is yours to accept. You can close in as soon as 24 hours or up to 90 days later.

Click here to learn more about how Housale works.