House foreclosure refers to any type of residential dwelling that has been repossessed by a mortgage lender. Although foreclosure rates are declining there are still plenty of people teetering on the edge of losing their home because they can no longer afford mortgage payments.
Avoiding house foreclosure is not an easy process, but programs exist to help borrowers understand required procedures. For most, a good starting point is to contact the mortgage lender to determine which home saving options are available.
Many banks participate in the Making Home Affordable program offered through the U.S. government. Participating lenders assess borrowers' ability to pay future loan installments, along with the home value and balance due on the mortgage note. Based on this information banks can offer borrowers a loan modification, mortgage refinance, real estate short sale, or deed in lieu of foreclosure.
Lenders that do not participate in Making Home Affordable also offer foreclosure prevention strategies, but are not required to do so. Therefore, borrowers will need to speak their lender's loss mitigation department to work out a solution.
If lenders are unwilling to cooperate, borrowers may need to seek assistance through the Department of Housing and Urban Development or retain the services of a real estate attorney. HUD provides complimentary housing counseling to individuals facing foreclosure.
Depending on the circumstances, HUD counselors might intervene and act as a mediator between borrowers and their mortgage service provider. Counselors can also determine if homeowners qualify for HUDs partial claim program which pays past due mortgage amounts when borrowers are at least 4 months in arrears.
Homeowners should take time to conduct research to better understand available options prior to contacting the bank. Doing so can help them determine if it is best to try and stop foreclosure or allow the bank to take possession of their home.
Although having real estate repossessed is an unpleasant experience, the stress, anxiety, and financial constraint associated with foreclosure prevention can be more devastating than constantly struggling to stay afloat.
Mortgagors often attempt to save their home to ensure they have a place to live and to lessen credit damage. While it is true house foreclosure can devastate credit ratings, foreclosed homeowners can engage in credit repair strategies and qualify for a mortgage note within a few years.
Due to the massive influx of foreclosure properties many real estate investors offer homes for rent with the option to buy. This can be a good option for borrowers unable to prevent foreclosure, but do not want to become a tenant and pay rent which offers zero return on investment.
Entering into a lease purchase option agreement or buying houses using owner will carry financing provides foreclosed property owners the opportunity to rebuild credit while working toward buying a house. However, it is crucial to become educated when buying houses using creative finance strategies.
The truth of the matter is house foreclosure is an unpleasant experience regardless of the outcome. Those who are able to work out home saving remedies with the bank must do everything in their power to remain in compliance with contract terms. Those unable to save their house should take time to learn about available options and carefully weigh the pros and cons of each.
Our real estate foreclosure article library offers information and resources to help distressed property owners make informed decisions. Topics include: loan modifications, mortgage refinance, mortgage forbearance agreements, short sales, deed in lieu of foreclosure, and tips for buying houses using seller-financing.