Understanding Foreclosure Alternatives


Many people find themselves in the midst of a foreclosure because they do not understand their options. Homeowners who are facing foreclosure can seek alternatives to in order to avoid losing their homes or having to go through a foreclosure.

Mortgage Modification

Sometimes lenders will work with homeowners to modify their existing mortgage in order to make payments more affordable. Few people realize that mortgage lenders don't actually want to foreclose on a home. Foreclosure is a costly process and more often than not, lenders lose money on a property in the process. As a result they will often work with homeowners to make alternative arrangements as long as those arrangements are reasonable.

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Short Sale

If it's not possible to come current on payments and there is only one lender that owns the lien on your house, one might attempt to short sale their property. Like mortgage modification, a short sale requires the cooperation of the lender. Again, a lender will often work with possible short sale buyers as long as their offers are reasonable because although they may not re-coup the full value of the loan in a short sale, it's often still less expensive than pursuing a foreclosure.

Bankruptcy

Chapter 13 bankruptcy can stop the foreclosure process while homeowners reorganize their finances. If the bankruptcy is granted, the court will impose a payment plan designed to pay off all debt owed within a specific period of time. As long as an individual makes the payments, their assets are protected.

Work with a Foreclosure Attorney

A foreclosure attorney can mediate between homeowners and the lender to stop the foreclosure process while homeowners bring their payments current. Additionally, a foreclosure attorney can insure that homeowner rights are honored during the process.

Don't Wait Until it's Too Late

A major mistake that many homeowners make is waiting until foreclosure proceedings have begun to take action. Lenders are typically more willing to work with proactive homeowners who demonstrate an interest in working out an arrangement and bringing payments current before the lender files for foreclosure. Time becomes of the essence as well when homeowners wait. Although foreclosure can take months, particularly for those clients who live in states in which foreclosure must be pursued through the court system, it's still very limited in the context of dealing with bureaucratic agencies through which filing a claim or notice can take weeks. It's important to understand when a situation is on the verge of becoming dire and erring on the side of conservative rather than risking one's house.


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