Forlosure is quickly becoming an epidemic in America. News reporting agencies tell us that foreclosure rates are at the highest rate ever; with more than 2.1 million filings in 2008. The increase in forlosures can be contributed to subprime loans, increased unemployment and expansive consumer debt.
Although forlosure has become a mounting problem in the U.S., there are steps which can be taken to save your home. Much depends on the length and amount of delinquent mortgage note payments and your ability to become current.
There is no doubt forlosure is a stressful experience. Many people avoid contacting their lender to discuss their situation. This is by far the biggest mistake any borrower can make. Believe it or not, your lender does not want your house to fall into foreclosure. If there is any way they can help you prevent losing your home, chances are they will be willing to work with you as long as you are proactive.
If you are currently in pre-foreclosure, it is imperative to contact your lender immediately. Homeowners in preforeclosure generally have more options available than those who have entered the foreclosure stage. This phase of the foreclosure process typically occurs when borrowers are delinquent in paying their mortgage payments by less than 90 days.
Most banks have a loss mitigation department which handles delinquent accounts. Once an account falls into foreclosure, a bank loss mitigator is assigned. This person can be your best friend or your worst nightmare. So rule number one is: be nice to the bank loss mitigator and follow through on any arrangements made.
If the financial situation which caused you to become delinquent on your mortgage payments has been resolved, the loss mitigator might offer a loan modification. This agreement rolls delinquent payments to the end of the mortgage loan and extends the repayment terms.
Another option used to avoid forlosure is known as a Forbearance Agreement. Using this type of arrangement, the lender temporarily suspends or reduces mortgage payments. Negotiating with your lender to obtain a forbearance agreement can be somewhat intimidating.
If you aren't comfortable working directly with your lender, the U.S. Department of Housing and Urban Development (HUD) offers free counseling through approved agencies. These trained individuals will assist you in saving your home from foreclosure.
If your lender isn't willing to work with you it might be time to ask family or friends for a loan. Most people are too embarrassed to ask for help. After all, no one likes to admit they are struggling financially. However, if you've run out of options and want to save your home; a loan from family or friends might be your answer.
When obtaining a personal loan from loved ones it is always a good idea to execute a promissory note which outlines repayment terms. Not only does this create a sense of security for all parties involved, it is also a legal instrument which can be used in court if either party defaults on their agreement.
Saving your home from forlosure may not be an option. If you aren't able to obtain the money to bring your mortgage current, and your bank is unwilling to negotiate, the only option left is to let it go. However, this doesn't necessarily mean you have to let it fall into foreclosure.
Some lenders are willing to accept a short sale; which means the Borrower can sell the home for less than is owned on the mortgage note. For example, if you owe $175,000 on your loan and locate a buyer who is willing to pay $150,000, the lender might accept their offer and write-off the remaining $25,000.
Caution should be used when engaging in short sale transaction. In some cases, the Internal Revenue Service imposes tax on the short sale amount. In other cases, the lender imposes a judgment on the difference between the mortgage balance and short sale amount. Experts recommend consulting with your tax advisor when engaging in a real estate short sale.
Forlosure can have tremendous negative impact on your credit rating and can haunt you for years to come. If you are facing foreclosure and interested in selling your house, Simon Volkov would like to help. As a private real estate investor, Simon specializes in helping individuals liquidate assets to stop foreclosure. Simon can be reached via the "Contact" page.
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