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What
is Foreclosure and How To Avoid It?
Are
you having trouble making ends meet? Not paying your bills
on time? Are you not able to keep up with your mortgage payments
and continue to get further and further behind? How do you
get yourself out of this mess and not lose your home?
Avoiding
foreclosure may be possible and you should work hard to avoid
it.
What
is foreclosure?
Foreclosure
is the legal means by which a bank or other secured creditor
sells or repossesses your home or a piece of real property
due to your default on its promissory note. When your house
is foreclosed on, you must move out and it is usually sold
at public auction. When the foreclosure process is complete,
it is typically said that "the lender has foreclosed
its mortgage or lien."
In the United States, there are two sorts of foreclosure in
most common law states. Under "strict foreclosure,"
the bank claims the title and possession of the property back
in full satisfaction of a debt, usually on contract. In the
proceeding simply known as foreclosure, the property is exposed
to auction by the county sheriff or some other officer of
the court. Many states require this latter sort of proceeding
in some or all cases of foreclosure, in order to protect any
equity the debtor may have in the property, in case the value
of the debt being foreclosed on is substantially less than
the market value of the property. In this type of foreclosure,
a deed is issued to the winning bidder at auction. Banks and
other institutional lenders typically bid in the amount of
the owed debt at the sale, and if no other buyers step forward
they get title to the property in return.
Some
states have adopted non-judicial foreclosure proceedings,
in which the mortgagee, gives the homeowner a legally specified
notice of the default and the mortgagee's intent to sell the
property. If the homeowner fails to cure its default, or use
other lawful means, such as filing for bankruptcy to stop
the sale, the mortgagee or its representative will conduct
a public auction in a similar manner as the auction described
above. The highest bidder at the auction becomes the owner
of the property free and clear of any interest of the former
homeowner.
What
Should You Do To Avoid Foreclosure?
•
Do not ignore letters from your lender. If you are having
problems making your payments, call or write to your lender's
Loss Mitigation Department without delay. Explain your situation.
This shows good faith on your part. Be prepared to provide
them with financial information, such as your monthly income
and expenses. Without this information, they may not be able
to help.
•
Stay in your home for now. You may not qualify for assistance
if you abandon your property.
•
Contact a HUD-approved housing counseling agency. Call (800)
569-4287 for the housing counseling agency nearest you. These
agencies are valuable resources and they frequently have information
on services and programs offered by Government agencies as
well as private and community organizations that could help
you. The housing counseling agency may also offer credit counseling.
These services are usually free of charge, and they can help
explain possible alternatives.
Some
of the possible alternatives you may consider include the
following:
Special
Forbearance. Your lender may be able to arrange a repayment
plan based on your financial situation and may even provide
for a temporary reduction or suspension of your payments.
You may qualify for this if you have recently experienced
a reduction in income or an increase in living expenses. You
must furnish information to your lender to show that you would
be able to meet the requirements of the new payment plan.
Mortgage
Modification. You may be able to refinance the debt and/or
extend the term of your mortgage loan. This may help you catch
up by reducing the monthly payments to a more affordable level.
You may qualify if you have recovered from a financial problem
and can afford the new payment amount.
Partial
Claim. Your lender may be able to work with you to obtain
a one-time payment from the FHA-Insurance fund to bring your
mortgage current.
Pre-foreclosure
sale. This will allow you to avoid foreclosure by selling
your property for an amount less than the amount necessary
to pay off your mortgage loan.
Keep
in mind that your lender does not want to force foreclosure
proceedings because it costs them a lot of money to do so.
Therefore, if you are sincere and show good faith, they are
more likely to work with you to find a solution. Foreclosure
can seriously affect your ability to qualify for credit in
the future. So get the help you need and avoid it if at all
possible!
About
the Author:
Greg Smith publishes information on real estate issues at
http://www.searchexact.com/Real_Estate/
. Visit his web site http://www.searchexact.com/
for top resources on unique and popular topics.
This
article may be freely reprinted as long as the author's resource
box and url links remain intact.
Resources:
• Build
Massive Wealth With Foreclosures
Step by step formula for building massive wealth through real
estate foreclosures.
• SeizedRealEstate.com
- Property Auctions
• Foreclosure
Hunters Guerrilla Marketing Step-by-step, turnkey system,
complete will all necessary software for the professional
foreclosure investor!
• How
To Buy Foreclosures - Just $9.95!
Sick of get rich quick stories? Something fishy in those other
websites? Get the REAL DEAL!
• Generate
Huge Returns With Foreclosures
Learn one of the best kept Secrets of all time. Pre-Foreclosure
Short Sales.
• Forfeited
Property: Seized Houses
Buy houses, commercial buildings, and raw land at the lowest
possible price, seized from delinquent debtors.
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