How To Stop Foreclosure: 4 Simple Steps You Can Take
Foreclosure is a difficult process, but taking the right steps can help you how to stop foreclosure. This article will cover four steps you can take to stop foreclosure – sell your home, apply for a loan modification, ask the bank if they will work with you instead of foreclosing, and file for bankruptcy.
4 Steps to Stop Foreclosure
If you’re behind on your mortgage payments and fearing foreclosure, you’re not alone. In fact, you’re in good company. According to the Mortgage Bankers Association, over 7% of homeowners with a mortgage were delinquent on their loan as of the end of 2018.
The first step to stopping foreclosure is to understand the process. Once you know what to expect, you can take steps to protect yourself and your family.
Foreclosure is a legal process that allows a lender to repossess your home if you default on your mortgage payments. The process varies from state to state, but generally follows these steps:
1. The lender files a notice of default (NOD).
2. The borrower has a set period of time, usually 30-60 days, to bring the mortgage current by making a full payment or reaching some other agreement with the lender.
3. If the borrower doesn’t take action during this period, the lender will file a notice of sale (NOS). This starts the clock ticking on the foreclosure process.
4. The property is scheduled for auction.
5. If the property doesn’t sell at auction or the borrower doesn’t redeem it within a specified period of time (this also varies by state), the property becomes bank-owned and is known as a real estate owned (REO) property.
The Benefits of Stopping Foreclosure
If you’re facing foreclosure, it’s important to know that you have options. While it’s not an easy process, stopping foreclosure is possible. Here are some of the benefits of taking action to stop foreclosure:
-You’ll be able to stay in your home. This is the most obvious benefit of stopping foreclosure. If you’re able to work out a solution with your lender, you’ll be able to keep living in your home.
-You’ll avoid damage to your credit. Foreclosure can do serious damage to your credit score. By taking action to stop foreclosure, you can avoid this damage and maintain a good credit score.
-You may be able to get a new loan. Once you’ve stopped foreclosure, you may be able to qualify for a new loan from a different lender. This can help you get back on track financially and avoid future financial difficulties.
How Can You Get a Loan Modification?
If you’re struggling to make your mortgage payments, you may be able to get a loan modification from your lender. A loan modification changes the terms of your loan, which can make it more affordable.
To be eligible for a loan modification, you’ll need to prove that you’re experiencing a financial hardship and that you’re unable to make your current payments. You’ll also need to show that you have enough income to afford the modified payments.
If you’re approved for a loan modification, your interest rate may be reduced, your loan term may be extended, or your monthly payments may be lowered. Your lender will work with you to come up with a plan that’s affordable for both of you.
Getting a loan modification can be a complicated process, so it’s important to work with an experienced housing counselor who can help you navigate the process and advocate on your behalf.
How to Stop Foreclosure – Conclusion
If you’re facing foreclosure, don’t despair. There are a number of things you can do to stop the process and keep your home. First, try to work with your lender to come up with a payment plan or loan modification that will work for both of you. If that doesn’t work, you can file for bankruptcy, which will stop the foreclosure process temporarily. You can also try to sell your home through a short sale or deed in lieu of foreclosure. Finally, if all else fails, you can wait until the foreclosure process is complete and then try to negotiate with the new owner for a rental agreement or lease-option.