Debt Reduction LessonsForeclosure

How Foreclosure Works

gray — Fri, 04 Sep 2009 02:43:12 +0000

The Frightening Process of Foreclosure – How Foreclosure Works

I don’t know about the rest of the world, but there have been times in my life when I have felt as though I was one paycheck away from serious financial peril. Too bad Superman doesn’t come to the rescue for matters such as this. One of my greatest fears has been losing a home because I lost my job, or had an injured child (or injured self) that required me not to work for an extended period of time that exceeded my savings or any of nearly a thousand reasons. The recent movie “Fun With Dick and Jane” struck a chord of sheer terror in my heart because bad things sometimes happen to good people. Good people have their lives ruined through circumstances that are completely and totally beyond their controls and yet the banks have to pay the salaries of their employees too.

With a foreclosure, there really isn’t a bad guy. There is no evil genius, mad banker waiting greedily in the wings to throw your family out on the street. The truth is most of these guys have a great amount of compassion and come across as harsh because the decision to or not to foreclose generally isn’t up to them. Besides we signed the dotted line when we decided to purchase a home. A home is, for most people, the single largest investment we make in our lives. At least as far as a personal investment goes. The process of foreclosure can be frightening if you are armed with knowledge, it is absolutely terrifying if you are uninformed throughout the process.

Here are some things you should know about the foreclosure process.

1) First of all, a home does not go into foreclosure until you have become 3 months behind on your payments. Of course the goal is to never get behind at all, but we all know that stuff sometimes happens and some things are beyond our control. This means you do not have to exist in constant worry that if you are a few days late on your mortgage payment for a couple of months that the sky will fall. This is unlikely to be the case unless you are seriously behind. The key is to take action to avoid foreclosure before it gets to that point.

2) Once you are three months behind you will either go into what is called judicial foreclosure or non-judicial foreclosure. In a judicial foreclosure, a lawsuit is issued to the homeowner who can elect whether or not to respond. If the owner doesn’t respond the home is auctioned off to the highest bidder unless the bid doesn’t exceed the total amount owed on the home. In a non-judicial foreclosure the lending institution would issue a statement of default and notify the owner of its intent to sell the home. The owner at this time can possibly work to arrange an agreement and payment plan that is acceptable to the financial institution or filing chapter 13 bankruptcy in order to stop the foreclosure. If this does not happen then the property will be sold.

3) Here is where it gets tricky. If the sale of the home doesn’t result in a sum of money that is at least equal to the amount owed on the home, the original homeowner is responsible for the difference. Failure to pay the difference can be just as detrimental to your credit as the foreclosure itself.

The process of foreclosure is not fun, it is not meant to be. I urge you if at all possible to avoid this process like the plague. It isn’t good for you as the homeowner, it isn’t good for your community as a whole, and it isn’t good for all the others who seek home loans or for you the next time you seek a loan.

The problem is that we as Americans tend to live within the razor sharp edges of our abilities without a safety net for the leaner times. This is the recipe for financial disaster. Don’t overextend yourself credit wise. Keep a healthy savings account, at least 5% of every paycheck should be placed into savings. And don’t buy more house than you can afford. Bigger, better, faster more isn’t very much if it lands you on the street.

Here’s a resource to check out if you’re in danger of losing your home.

How To Stop Foreclosure

gray — Fri, 21 Aug 2009 03:31:28 +0000

How to stop foreclosure

For most people, their home is their biggest investment; so the thought of losing it is. No matter how much you plan and save, unexpected events can make it impossible to meet your payments. While this is obviously worrisome, your situation is not hopeless and there are things you can do. Before giving up on your situation, there are several options to stop foreclosure.

Click Here To Save Your Home

The biggest mistake you can possibly make is to try to avoid your problem. You may think that if you simply ignore the calls and letters; you will be able to fix the situation before you lose your house. But if the situation stays the same or gets worse; you’ll be putting yourself in an even worse position. Foreclosure is not an easy thing for a bank either. It takes them time and money to foreclose on a home and re-sell it. It’s better for them if you continue to make your payments and keep your home. Also, while banks may seem like big, nameless, faceless companies, they are actually operated by real human beings who understand that bad things happen and it isn’t always your fault. You should try to talk to your creditor before you miss a payment. If you can offer them a solution to the problem, they will probably be willing to work something out with you to help. If you are uncomfortable talking to your lender directly, you can contacts an approved HUD counselor. They can help you work out various options and help you work with your lender.

If at all possible, don’t miss your mortgage payments. Missing a credit card payment or some other bill seems bad, but it’s not nearly as bad as missing a mortgage payment. Even if you don’t have all the money, making a partial payment is better than nothing. It will also make your lender more willing to work with you.

There are several options your lender may offer you for short term relief. This is if you cannot make payments for a limited amount of time. One option is a loan from the FHA. These loans are interest free and specifically designed to help people in danger of foreclosure and can help stop foreclosure. This is an option if you have already missed several payments (4 to 12 months worth) but can now begin making normal payments. This loan will provide money for the payments you missed, but must eventually be repaid (along with your FULL mortgage payments). If you missed payments, but now have a steady income and can pay those missed payments, you may be able to get reinstatement, in which you pay the missed payments as one lump sum, or forbearance, where payment is delayed if you work out a plan to repay in the future, or a repayment plan, which is when you pay off the money due by adding it on to your current mortgage payments.

If your money problems are not going away any time soon, there are other more drastic ways to stop foreclosure. You may be able to modify your existing mortgage agreement. This is generally done if you can make payments now, but do not have enough to compensate for missed payments. In this agreement, the terms of your mortgage will change to include the missing money. If you simply won’t be able to make payments now or in the future, you should try to sell your home. You should still discuss this with your lender first to ensure they will not foreclose before the sale takes place. If you cannot sell, you may be able to convince the bank to take your deed as payment. You still lose your home to the bank, but the affect on your credit rating is not as severe as foreclosure.

Remember when talking to your lender to always be prepared. Bring all your financial records with you when you come in for a meeting. Not only will they have a full idea of your financial abilities, they will also know you are serious and committed to setting things right. The last thing to remember is to never give up hope. There are many agencies and possibly personal friends who are willing to help you. You simply have to ask.

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