If you are having trouble making payments on your home these days, you are not
alone. A recent report from RealtyTrac, Inc. says foreclosure filings are up 48% from a year ago. States which have been hardest hit by foreclosures in 2008 include Nevada, California, Arizona, Michigan, Florida, and Colorado.
Adding to these concerns, a new study released by Harvard University says the U.S. housing market is the worst in 50 years. The study notes the mortgage market meltdown, steep rise in foreclosures, the decline of new home construction, falling home prices, and mounting job losses have all converged to make recovery from the current real estate climate more difficult in the days ahead.
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For homeowners who are on the verge of defaulting on a mortgage obligation, the sooner action is taken to protect a home the better. The following steps could be helpful to avoid a foreclosure:
1) Review the terms of your mortgage or deed of trust. Go over the sections pertaining to default and seek advice from an attorney. There are a number of attorneys who specialize in real estate law who are knowledgeable about the foreclosure process in each state and they are best qualified to advise you on your rights. Some might offer free initial consultations. Additional assistance might also be obtained through non-profit legal aid organizations and/or low cost legal services. Check with the bar association in your state to see what services are available.
2) As soon as you realize you can't make a payment, contact your lender directly and discuss and weigh all options with them. It might be possible to refinance or modify the terms of your payment schedule. Check to see if your lender offers and if you qualify for a forbearance agreement. This would enable you to temporarily postpone payments for a certain period of time without your lender filing a notice of default and initiating foreclosure proceedings against you. If your situation is dire and you realize you won't be able to make payments for an extended period of time, see if your lender will accept a deed in lieu of foreclosure. Through this process, you will basically deed your home over to your bank or lien holder and can avoid a lengthy foreclosure proceeding.
3) Talk with counselors of national programs such as HOPE NOW. It is an alliance between lenders, credit and mortgage counselors, and investors. HOPE NOW can assist distressed homeowners by providing streamline measures and options to prevent foreclosure.
4) Proceed to sell your home. You can utilize the services of a real estate professional in your local area or post your property online through any number of for sale by owner websites. Even if you don't get your asking price, it is possible your lender may agree to a short sale. This means you sell your property for less than the outstanding balance owed, but your bank or lender agrees to accept the proceeds as full satisfaction for the debt. Not all lenders will accept a short sale and most have certain procedures that must be complied with.
5) As a last resort - file for bankruptcy. Once you file a bankruptcy petition, it will automatically stop the foreclosure process. Depending on the type of bankruptcy you file, you may be able to work out a payment plan to keep your home. However, understand that once you file for bankruptcy, it can be reflected on your credit report for seven to ten years.
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