The frequency of foreclosure in the U.S. has gone down significantly since the recession yet many homeowners are still plagued with this difficult issue. An inability to keep up with mortgage payments may force banks to begin the foreclosure process. The process is not only difficult for you, but time-consuming and costly for your lender. Due to this difficulty, your lender may be willing to work with you. In any case, you may have several options available to you. These are geared towards your desire to keep your home or to dispose of the property.
FORECLOSURE OPTIONS TO TRY AND SAVE YOUR HOME
1. Reinstate of Your Mortgage.
You can save your home by reinstating your mortgage. You will cure the default by paying all past due amounts owed, including interest, late fees, legal fees, court costs, etc. You are entitled to request from your lender the reinstatement figure valid through a date certain. Your lender is required to provide this information. If you pay the amount stated within the time-frame indicated, you can stop the foreclosure and keep your home.
2. Redeem Your Mortgage.
You can save your home by redeeming it from your lender. This means that you pay the entire mortgage, plus interest, late fees, legal fees, court costs, etc. You are entitled to request from your lender the redemption figure valid through a date certain. Your lender is required to provide this information. If you pay the amount stated within the time-frame indicated, you can stop the foreclosure and keep your home. You are entitled to redeem any time up to ten (10) days after the foreclosure sale or until the Court confirms the sale.
3. Loan Modification.
Request the Lender modify your loan to make it more affordable or improve your ability to repay the loan.
4. Defend The Foreclosure / Request Court Mediation.
File a response to the Complaint for Foreclosure raising any applicable defenses and counterclaims. If this is done timely, you also can utilize the Court’s mediation process by requesting mediation and submitting the required forms and information in timely to try and negotiate repayment of the past due amount or a modified loan (mortgage) so you can afford to keep the home.
5. Bankruptcy (Chapter 13).
Evaluate whether a Chapter 13 bankruptcy is an option to save your home.
FORECLOSURE OPTIONS WHEN YOU DO NOT WISH TO KEEP YOUR HOME (Or keeping it is unrealistic or not in your best interest)
1. Sell Your Home.
You could try to sell your home on the private market and payoff the mortgage(s) prior to the foreclosure being finalized.
2. Short Sale.
You could try to sell the property for less than you owe on the mortgage(s). This requires lender approval, as the Buyer would be asking the Lender to accept a purchase price that is less than the amount owed on the mortgage. Lenders are not required to accept a lesser payment, but may do so if the amount is satisfactory to them. You are not likely to receive any proceeds from the sale, though some Lenders may offer a small incentive payment to you for relocation costs or as compensation for selling the house.
3. Deed In Lieu of Foreclosure.
You can propose to the Lender that it accept a deed from you for the property in exchange for them dismissing, or not pursuing, a foreclosure case in court. In some cases, the lender may negotiate with you as to the amount of time that you may remain in the property or even a small compensation for you for saving the Lender the trouble and expense of pursuing a foreclosure judgment in court.
4. Consent to Foreclosure.
You can propose to the Lender that you will consent to the foreclosure, saving them the expense of further litigation. In some cases, the lender may negotiate with you as to the amount of time that you may remain in the property and may offer some small compensation to you for saving it the trouble and expense of getting the judgment without your consent.
5. Bankruptcy (Chapter 7).
You may be eligible to file for a Chapter 7 bankruptcy. This would get you relief from your dischargeable debts, it may buy you some additional time to find a new place to live and it may help you avoid the tax consequences of the forgiven / cancelled “debt” from the mortgage you did not pay, which could be enormous.
6. Bankruptcy (Chapter 13).
You may be eligible to file for a Chapter 13 bankruptcy. This could get you relief from some or all of your dischargeable debts, it may buy you some additional time to find a new place to live and it may help you avoid the tax consequences of the forgiven / cancelled “debt” from the mortgage you did not pay, which could be enormous. It also could enable you to get caught up in any arrearages on your mortgage to save your home, if financially feasible to do so.
7. Do Nothing / Wait / Buy Time.
Another option you have is to do nothing, other than wait until the Court forces you to vacate the premises and save up money in the meantime to find a new place to live. It is impossible to predict exactly how much time you have to remain there, but it may be possible to provide an estimate given the foreclosure status. There are some ways to minimally increase the amount of time you have to remain in the premises, which can be reviewed and discussed during your consultation.