If you are behind with more than three mortgage payments, or if your lender has already registered a Notice of Default (NOD) against you, you may think that the loss of your home can not be avoided. In fact and even at this stage, you may be able to avoid the foreclosure process. An experienced real estate attorney or foreclosure defense attorney can implement a legal defense and loss mitigation strategy to help you save your home. Here are five strategies to stop the foreclosure process.
Under a forbearance consensus, the lender concurs to reduce the amount of your monthly payments or suspend your mortgage payments, in both cases for a short period of time, and in exchange you promise the lender to commence making full payments at the cessation of the forbearance period, plus an extra amount to pay off the missed payments. A forbearance agreement is a prevalent solution when someone is laid off or an individual is called to military duty for a short period of time and is unable to make any payments now but will most likely be able to catch up in a near future. A forbearance agreement commonly last between three to six months.
Loan or mortgage modifications are created to lower your monthly payments over the long term and bring you current on the loan. If you currently are unable to afford your monthly payment now and you believe you won’t be able to make payments either in the near future, a loan modification is most likely the best strategy for you to remaining in your house. With the loan modification you can reduce your current interest rate to a lower current market rate. Loan modification can also help to lower the monthly payment when converting from a variable-rate to a fixed-rate loan, it also will aid on extending the loan’s repayment period or re-amortize the loan when adding the amount of missed payments to the principal balance and issuing a new loan at a new lower interest rate and for a new longer period of time.
After your lender files a Notice of Default, known as NOD, but before an auction is scheduled, if you get an offer from a buyer, you can submit it to your lender and the lender need to consider it. If a foreclose process moves forward, the lender is going to simply turn around and try to resell it; but if you present your lender with a reasonable short sale offer they may accept it, saving your lender the time, hustle and effort of finding a qualified buyer in a seller’s market, also called soft market.
Once a bankruptcy petition is filed, federal law prohibits all debt collectors, from continuing collection activities. Since foreclosure is considered a collection action, the day your lender finds out that you have filed for bankruptcy, the foreclosure process will be stopped. Bankruptcy actually only gives you more time to recover financially. The law requires that your lender and other creditors work in good faith with you to establish a reasonable payment plan so you can get back on track. But once you get to court the bankruptcy trustee will simply play the arbitrator or mediator roll between you and your creditors.
Deed in Lieu
A deed in lieu of a foreclosure process takes place when a homeowner facing a foreclosure, voluntarily signs the deed of the property back to the lender. Lenders are often unwilling to agree to return the property through a deed in lieu of foreclosure for a number of reasons. One of the reasons is, a lender fear that the homeowner will file a lawsuit alleging that they did not understand what was happening, the lender must pay any second or third mortgage or home equity lines of credit (HELOC) before a deed in lieu is executed and the lender wants to be sure that the financial distress that the homeowner alleged is real. Allowing the foreclosure process to continue is one of the ways in which the lender can be sure that the borrower is not faking poverty. In that capacity, a deed in lieu of foreclosure is practically never granted unless a foreclosure is imminent or the homeowner has had the house in the market for several months and has not been able to sell it.
If you would like to learn more about how Thompson Legal, P.A can help you with your Foreclosure, call us today (954) 510-3366 or fill out the Contact Form.