How To Stop Foreclosure
Currently the mortgage business is reeling. In recent months, both small and large mortgage companies have been
collapsing as private investors and lenders have shut off the flow of cash to make mortgage loans. As noted, some
of the top lenders in the nation have filed bankruptcy.
||HomeBanc filed for Chapter 11
bankruptcy in August 2007
||First Magnus Financial Corp., a
national mortgage lender shut down its lending operations on August 16, 2007
||In August 2007, Countrywide, the
largest U.S. mortgage lender borrowed $11.5 billion to help weather the current financial crunch.
Due to our volatile and somewhat unstable economy, foreclosures are at an all time high. If
you are facing this difficult situation, the REO Dr is going to provide you with all of your available options.
Consider them carefully and remember to consult with professionals, (i.e., attorney, CPA) before committing to
Up The Back Payments
The quickest way to stop a foreclosure is the obvious; make up back payments. If you can come
up with the funds (including the late fees and legal expenses) this will automatically halt a foreclosure.
Make Payment Arrangements With Lender
Many lenders will negotiate a deal with you to take what you owe them and pay it over a few
months in addition to your normal mortgage payment. This option means that your payment will increase for a few
months. ALERT; only take this option if you KNOW you can afford your current payment plus the additional
Talk with your lender about exercising this option. Or contact our recommended lender,
Banker’s Secrets. If you have enough equity, this option could actually lower your payments!
Restructure Your Note
In order for a lender to allow you to exercise this option, you must be able to prove that you
have resolved the issue/situation that caused you to fall behind. Oftentimes lenders will take what you owe and
add it on to the end of the mortgage in the form of additional payments. The caveat; depending on how the note
is restructured, the interest rate could go up and/or your payment could go up.
Use Equity Line of Credit
If you are able to obtain or have a line of credit with your bank or if
you qualify for a home equity loan, either of these options may give you the cash you need to bring the
mortgage current and stop the foreclosure process. DULY NOTE, this will make your payments higher than before;
if you can’t afford the increased payments, you’ll need to forego this option.
Seek Mortgage Relief Assistance
Some government organizations and charities will give you the money to
bring your mortgage current and stop foreclosure… provided that you can prove to them that your situation is a
Obtain Funds From a Relative or Friend
Facing foreclosure is not a time to walk in pride. If you have a family member, relative or friend who can loan or
grant you the necessary funds to halt the foreclosure, ASK THEM!
Use the CCCS
The CCCS, which stands for
Consumer Credit Counseling Service, is a nonprofit agency that provided housing counseling for people behind on
their mortgage payments. At the REO Dr, we reccommend contacting the CCCS to help
you analyze you options.
Use a Debt Relief Agency
Debt relief agencies are better alternative to bankruptcy. Essentially, they negotiate with
all of your creditors/lenders and have been successful in stopping foreclosures. Duly note, do your homework
before hiring an agency
LAST RESORT OPTIONS
This next set of options should be considered only as a last resort. Only use them if you are unable to exercise
any of the above options.
Sell Your Home
If you have the time, (i.e., foreclosure auction date is not looming) and your house is in
good condition, putting it up for sale with an aggressively successful real estate agent could be your best
option. This will protect your credit rating from a foreclosure and you may possibly walk away with some cash
provided that you have sufficient equity.
Negotiate a Short Sale
This is when you negotiate with the lender to accept sale proceeds that aren’t enough to cover
the loan balance owed. Normally the lender would sue for the balance, but with a short sale the lender accepts
the “short sale” as payment in full. Remember to consult with a Real Estate attorney before attempting to
exercise this option.
Deed in Lieu of Foreclosure
Some lenders will allow you to give the house back to them in order to stop foreclosure. The
caveat is that this maneuver will reflect negatively on your credit reports.
Obtain a Hard Money Loan
This last resort option should only be exercised if you know FOR SURE that you are coming into
some money rather quickly. The points, fees and interest charged by hard money lenders will be costly. In
addition your payments will be higher.
Sell To a Private Investor
Private investors such as the REO Dr can purchase your home in as little as 3 days provided
that we have all of the necessary paper work. By selling to a private investor, you stop the foreclosure process
and protect your credit.
Use Legal Filings
Although we don’t condone this option, your attorney may be able to halt the foreclosure
process for quite some time by bombarding the lender with legal motions.
NOTE: This is a last resort measure; before exercising this option, consult with a qualified attorney. BE ADVISED;
some loan contracts have legal verbiage that essentially shields the lender from bankruptcy proceedings. Meaning,
they can still foreclose on you in spite of the bankruptcy filing.
Again, in using any of the above options, whether they be last resort or not, use caution and
good judgment and always consult with professionals prior to signing any legal documents.
Source: Harold Becker, REODr.com