Know all your options to stop foreclosure

1. Call up your lender

Foreclosure proceedings are a costly and time-consuming process. In most cases, the lender would rather be happy working out a solution then repossess your real estate or home.

The lender would probably give you the following options:

• Work out on a repayment plan with your lender to help you start making your loan monthly payments. Over a specified period, you work to push the payments continuously and also make up for any late payments
• If you choose a loan modification, then the lender changes the existing loan clause. There will be changes in your interest rate, length, and due amount, making it more manageable to pay.

2. Catch up payment

If you are falling short of a few payments and you think that you can make the payment now, then the catch-up payment plan is the right way that stops foreclosure. You do not have to reinstate the amount at one go completely. 

This plan will let you catch up on the payment over 18 months. The method is the best among the options to stop foreclosure if you were going through a short-term hardship but have resumed work now and can start to pay towards your mortgage loan amount.

3. File Bankruptcy

For many, one of the options to stop foreclosure is to file bankruptcy. Bankruptcy does halt the sale for some time, but this is not worth considering. If you find yourself in a situation that has overwhelmed you with debt, it is best to consider other options to stop foreclosure.

If you filed for bankruptcy, then it will have a major impact on your credit score. It should be your last option if you wish to delay the foreclosure while reducing or eliminating your debt. 

4. Make a short sale

Even after a modification in your loan or your repayment plan, if you still find yourself in a situation where you cannot meet your mortgage payments, think about a short sale. This is something that your lender has to agree to. If you enter into a short sale agreement, the lender will agree to settle for a lesser amount than what the home is worth. This method will ultimately cause you to lose your home, but a short sell would not push you into facing foreclosure. There would also be no repercussions of the sale on your credit statement.

5. A HUD-approved housing counselor could be of help

Speak to a HUD approved housing counselor if you still need help to figure out what could be among the best options to stop foreclosure. The HUD councilors are federal funded agencies that have a tie-up with many lenders. They help struggling homeowners to secure an affordable mortgage payment option. The counselor would look at your case and help you come out of the situation.

6. Dispose of your home

You may not be able to meet your mortgage payments or want to get out of debt. In such a case, sell your home, which could be the best solution for you. You can seek out an investor for a quick sale. The transition should close before the foreclosure auction.

7. Deed in lieu

In a deed in lieu foreclosure, the owner will sign the home’s deed back to the bank. This is done voluntarily. It has the same impact on the credit score as a foreclosure. However, in most cases, lenders would not be ready for this because they fear getting sued by the homeowner later. The lender will proceed with the foreclosure instead of choosing the deed in lieu option to ensure that the borrower is not faking his bankruptcy.

The deed in lieu of foreclosure is not granted unless foreclosure is unavoidable. However, you may still want to give it a try.