Many people are fulfilling the "American Dream" when they buy their own home. For many homeowners, the purchase of real estate didn't come easy. They scrimped and saved for years until they could finally afford a down payment on their very own home, which was a dream ultimately attained.
When people buy a house they don't plan for it to go into foreclosure; that concept is usually the furthest from their mind when they sign the mortgage papers. But unfortunately, in these tough economic times millions of borrowers are losing their homes compared to those of years past.
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Whether real estate owners suffered from a job loss, a pay cut, a medical emergency, or a divorce, most people lose their homes due to circumstances beyond their control. Once the much dreaded pre-foreclosure notice comes in the mail, they must take immediate action to put a stop to the impending foreclosure before they lose the place where they currently live.
The average owner typically loses their house to foreclosure because of a financial hardship. If they still have an income but can't afford to keep up with their current payments, they may be a good candidate for a loan modification that would reduce both their monthly payments and their overall loan balance.
Due to the fact that the depressed real estate market and unemployment made it increasingly difficult for homeowners to keep up with their payments, President Obama announced the Home Affordable Modification Program (HAMP). The HAMP was to provide $75 billion in subsidies to lenders who elected to help borrowers out with a loan modification. Under this program, both borrowers who are delinquent in their payments and borrowers who have maintained their payments but owe more than their home is worth are eligible for a modification. In fact, those who take advantage of the program are eligible for up to a $5000 tax credit.
Another way to stop a foreclosure is to file a Chapter 13 bankruptcy. With a Chapter 13, an "automatic stay" is put on all legal and collection activity, including foreclosures. With a Chapter 13, the borrower will be required to make an arrangement where they are to pay off their debts within 3 to 5 years. One benefit to a Chapter 13 is the fact that the borrower gets to keep their property and they can spread out their mortgage arrearages over the life of the repayment plan (3 to 5 years), the disadvantage of filing a Chapter 13 is the fact that they will have to make payments on the home at the present loan arrangement.
Foreclosure is a complex area of law that must be handled by an experienced real estate attorney. It is important for borrowers facing this to examine all their options. Whether they choose to seek a loan modification, file for Chapter 13 bankruptcy, or if they wish to entertain other alternatives, they must do so after obtaining professional legal advice on the matter.
Foreclosures are time sensitive and it is crucial for the borrower to act in an expedient manner. Once you have been sued, you will have just twenty days from the time of service to respond, otherwise the lender may decide to get a judgment and move forward with the sale. A qualified attorney will know exactly what steps to take, and in what amount of time. If your home is at risk of foreclosure, contact a highly knowledgeable real estate attorney as soon as possible!
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