FORECLOSURE

If you’ve received a notice of default, you are not alone. Millions of Americans have been served notices of default and the country is in the midst of a foreclosure epidemic. There are foreclosure alternatives available, even at this stage of the foreclosure process.

If you want to avoid foreclosure, help is available. But you will need to get into action and seek out a solution. Contact your loan servicer to discuss your options.  If you avoid contact, your servicer and lender will have no choice but to believe that you do not want to avoid foreclosure.

Foreclosure is the least desirable option for lenders and borrowers alike. In a foreclosure the borrower loses the home and the negative impact to his or her credit rating is significant. Lenders lose an estimated $40,000 to $80,000 on every foreclosed property. Since most foreclosed properties are vacant and subject to vandalism and disrepair, they can lower the value of homes in the surrounding neighborhoods. Right now, unprecedented efforts are underway to reduce the number of homes going into foreclosure. These efforts include the Obama Affordability Plan and state plans. There are also options for at-risk homeowners who need foreclosure help.

Foreclosure Process

Foreclosure processes vary from state to state. They usually begin after three to six months of missed payments. At that point, a notice of default is filed with the county, putting the homeowner on notice that foreclosure proceedings have started. If the loan isn’t brought current within three months, a foreclosure sale date is scheduled. The homeowner will receive a notice of sale and that same notice will be posted on the property. The property can be sold at auction or it may become “real estate owned” (REO), which means that the lender now owns the property. When the lender does sell the home, the sales price is typically less than the loan amount.

Deed in Lieu of Foreclosure

The deed in lieu of foreclosure is when a borrower voluntarily surrenders a property, avoiding a lengthy and expensive repossession. It satisfies the unpaid loan that’s in default. The deed in lieu of foreclosure is less damaging to the borrower’s credit rating and can be less stressful than a regular foreclosure. Both parties must enter into a deed in lieu of foreclosure voluntarily.

Alternatives to Foreclosure

Most homeowners at risk of foreclosure have tried to qualify for a loan modification or have tried refinancing but were not able to qualify. For these homeowners, a short sale may be a good alternative. A short sale is when a lender allows a property to be sold for less than the amount owed on a mortgage. Although this results in a loss to the lender, the lender essentially agrees to “call it even.” In other words, once a buyer has made an offer the bank finds acceptable, your mortgage debt is considered paid once the transaction is complete.

Remember, there are alternatives to foreclosure, but you must seek them out. Get into action by reading the articles on MortgageOutreach.org that inform you of the documents you’ll need to gather, as well as the steps to take.  There is hope, but you will need to be proactive in your approach to finding a solution.