The process of repossessing your home by a lender is known as foreclosure. By law, signing a mortgage means that you’ve agreed to pay the lender back, in full, for the loan, and you’ve agreed to do it according to their terms. When you stop making payments, you’ve essentially breached that contract. As a result, the lender has the right to take back your home and foreclosure takes place.
Receiving a Notice of Delinquency in the mail doesn’t automatically mean that you’re going to lose your home. This foreclosure process is undoubtedly scary, however, there are things that you can do to slow down the process and get back on track to fight foreclosure, at the very least, to leave your financial record in the best shape possible.
Educate yourself. Many initial notices of late payment will contain information on foreclosure prevention options. Take a deep breath and read over everything you’ve received from the lender, including the mortgage itself. Knowing all the details is very important, as it will educate you on your next moves. Later mail might contain important notices about the foreclosure process and pending legal action. No matter what it says, it’s better to be informed so that you can do proper actions. Also, knowing which type of state you live in can help you figure out how much time you have to find a solution.
Call your Lender. Contact your lender as soon as possible. Most lenders would rather work with you to find a solution than actually repossess your home. The reality is that foreclosure is a very time-consuming and costly process. Whether you have been laid off at work, have been divorced or simply can’t pay all your bills, your lender would much rather work with you and help you to fight foreclosure if possible. Honest communication and a willingness to work together will go a long way towards helping you get back on steady ground. Your lender may offer:
Contact a HUD-approved housing counselor. If talking to your lender doesn’t help, it may be worth it to look into speaking with an HUD-approved housing counselor. There are federally-funded agencies in each state that work with a variety of lenders to secure affordable repayment options for struggling homeowners. One of these counselors will be able to look at the specifics of your situation and help you figure out your options.
Think about doing a short sale. If you don’t see yourself being able to repay your mortgage – even with a loan modification or repayment plan – a short sale may be a good option for you. You’d have to ask your lender for permission because, unlike a traditional sale, in a short sale, the lender agrees to settle for less than the home is worth. The bank, rather than you, the seller, is also in charge of choosing which offer to accept.
Hire a Lawyer. If both parties can’t seem to work on a solution, it may be time to hire a lawyer. This option is tricky as it can only be used if the lender filed non-judicially for foreclosure. If they did not file judicially, then you can sue them. Often this does not result in a fully stopped foreclosure, but it will allow for extra time to come up with other options.
Consider Bankruptcy. A legal action such a bankruptcy can stop all foreclosure action. Call a lawyer who specializes in filing for bankruptcy and ask for a thorough explanation of all your options, costs and time frame involved. It won’t permanently stop a foreclosure action but it will surely postpone it.
While you may not be able to defeat a foreclosure action, it does not hurt to look at the documents and consider whether you have a defense. Challenging the legality of a foreclosure can be a tricky business, though some have managed to do it successfully. Consult a bankruptcy attorney who knows the rules of your jurisdiction and will explain your options.
If you need assistance on any of the above issues, you may call us at 216-282-4332 and CPD Homes will be more than happy to talk with you.