How to Stop Foreclosure and Save Your Home

We live in tough financial times.

Indeed, the total consumer debt at the end of 2018 was almost $4 trillion. That’s a staggering number and an indicator of the financial straits people are in across the United States.

Obviously, when money is tight, loan repayments get harder.

Mortgage repayments can become a particular struggle. After all, they’re often the greatest monthly expense to cover. If you can’t afford to pay, then there’s the potential for foreclosure.

It’s a predicament that’s always rife with stress and anxiety. And it’s unfortunately common around the country. With insufficient funds coming in, and a family to provide for, losing your home is the last thing you need to happen.

Thankfully, there are ways to turn the situation around. Want to know how?

Keep reading to discover 6 top tips to stop foreclosure and save your home.

1. Work It Out

All might not be lost.

The first step to take for anyone facing foreclosure is to speak with the lender. Don’t delay out of embarrassment or concern. A compromise may be available.

Most lenders don’t want to take your home. They might be willing to renegotiate your terms and find another solution. This is known as a loan modification.

Be sure to talk to them about your options. The sooner, the better. However, technically speaking you have until the auction date to do so. That date signals the point of no return.

Forbearance, debt forgiveness, and repayment plans are 3 examples of possible modifications.

These are, respectively, when lenders: postpone legal action to give you a chance to repay, waive a number of missed payments (don’t count your chickens on this one), and spread missed payments out over successive ones.

2. Seek a Buyer

Another option is to find someone who’s willing to buy your house.

Essentially, lenders are compelled to consider an offer if a buyer makes one prior to auction. After all, that’s what they’re going to do after they foreclose anyway. You can save them the hassle.

Don’t give up hope just because the foreclosure process has begun. Speak to an estate agent to see how valuable your house is and how many days they’d expect it to stay on the market (DOM). For a good price and low DOM, you could sell your house and solve the problem.

Short on time? Search aggressively and do what you can to find someone to buy the house. With a buyer in the bag, the lender is likely to stop the foreclosure.

3. Deed-in-Lieu

On the face of things, a deed-in-lieu of foreclosure sounds like an ideal solution.

Essentially, the homeowners sign the deeds of the house back over to the lender. The house is effectively given to them. In return, the mortgage is forgiven and the foreclosure stopped.

It’s worth enquiring about. However, they’re rarely done.

Firstly, the credit hit to the homeowner is as severe as from foreclosure. Likewise, lenders are wary too. There are multiple reasons why. One is that they can be sued in the future by homeowners who claim ignorance of the process.

4. Short-Sale to Success

Consider opting for a short-sale.

Short sales are when you can buy or sell real estate at a price that falls below the mortgage amount owed by the current homeowner.

You’ll find different opinions out there as to their value. However, they can definitely help you out of foreclosure. Negotiate with the lender to see if it’s an option.

They might be happy with this option. After all, they avoid the time and expense of repossessing the house. The current homeowner prevents the foreclosure and the hit to your credit rating. Your credit doesn’t come off unscathed. But it’s nothing like what happens in a foreclosure.

5. File a Lawsuit

Be careful with this approach.

However, another way to stop your foreclosure is by filing a lawsuit against the lender. Take this tack a reasonable time before the foreclosure is set to happen.

It’s a reasonable option in situations where they don’t own a promissory note (or can’t prove they do), violated the Homeowner Bill of Rights, or didn’t follow the requisite steps in the process of foreclosure.

That said, it will usually only work if they’re foreclosing outside of the court system. By contrast, if they’re taking the judicial route, then you’ve already had a chance in court by the time of foreclosure itself. You’re less likely to succeed as a result.

Likewise, there’s always the chance of losing. You don’t want to be lumped with the lender’s legal fees too.

6. File for Bankruptcy

If you’re on the brink of foreclosure, then consider filing for bankruptcy.

Obviously, bankruptcy isn’t an ideal solution by any stretch of the imagination.

But it does mean you’ll be granted an immediate automatic stay. Once in place, you cannot be foreclosed upon and the lender is prohibited from trying to collect their debt.

You can expect them to try and get the stay lifted. However, even if the courts grant that, you still buy yourself extra time to deal with the situation (expect a month or two at least, and sometimes even more).

There are different types of bankruptcy. Be sure to speak with a legal professional to discuss your options and the best way forward.

Time to Stop Foreclosure

There you have it: 6 top tips to help you stop foreclosure happening on your house.

Unfortunately, millions of Americans are in financial dire straits. Debt obligations are high, income is low, and savings are non-existent. Making repayments on loans and mortgages is an ongoing challenge for many.

The repercussions of missed mortgage payments are severe. Foreclosure is an increasingly common occurrence. It’s a horrible situation for everyone involved. Facing homelessness, it’s understandable to want a way out.

Thankfully, there are multiple ways a homeowner can successfully stop (or at least delay) foreclosure. Hopefully, this article has highlighted the main ones.

Like this piece? Want further housing-related advice? Then be sure to check out all of our other real-estate blog posts!