8 Ways to Defend Yourself From Foreclosure

The 2008 market crash devastated the economy and many became victims of foreclosure. While the housing market has improved over the years, there are many people that still have difficulty with their mortgage payments, especially now during the time of the pandemic. Many people have returned to work or have gotten new jobs, but may still be looking at foreclosure. Fortunately, there are some steps that you can take to help prevent a foreclosure from happening to you. 

1. Look At Your Finances

The first thing that you should do when facing foreclosure is to take a look at your financial status. Do you have assets that you can sell to make the payment? Are there unnecessary expenses like cable TV that you could cut out to pay your mortgage? Do you have a set budget each month? If you are not sure about your finances, it would be a good idea to consult a financial planner for some help on how to improve your financial situation.

2. Speak With Your Lender

Your lender does not want to foreclose on your home. They are not real estate agents, and it can take them months to get the money back on your home. Do not wait until you are several months behind to speak to your lender. When you do call in to speak to the lender, make sure you are talking to someone that can help you with your account. Some options may be a loan modification or a loan reinstatement. The sooner that you contact your lender, the better chances you will have at a solution.

3. Governmental Options

There are several programs that the United States government offers to help you to avoid foreclosure. The Home Affordable Modification Program is one of them, and it will allow you to modify your loan to have a lower monthly payment. Another program is called the Home Affordable Refinance Program, which will allow you to refinance your mortgage. Be sure to check these programs out if you are in threat of foreclosure.

4. Selling The House

It may be possible for you to sell the house and avoid foreclosure. In some areas, your home may be worth more than the mortgage. When you sell the home, you will not have any negative things on your credit score, which will allow you to purchase another home in the future. You may be able to buy a cheaper home or choose to rent for the time being until your financial situation improves. 

5. Offering The Deed Back To The Lender

Instead of foreclosure, your lender may allow you to transfer the title of the property to the lender. You will still lose your property, but you will be able to avoid the hassle and the cost of going through a foreclosure. The other downside to this is that it will negatively affect your credit score, which can hurt you if you try to purchase another home in the future. For this reason, you may want to consider this as one of your last options. 

6. Filing Bankruptcy

To prevent foreclosure, you may want to see if you can file for bankruptcy. Chapter 13 will allow you to stop the foreclosure process and allow you to repay the mortgage debt in your three to a five-year debt repayment plan. If you plan on filing bankruptcy, you will need a bankruptcy lawyer in New Jersey or wherever you may live. A bankruptcy lawyer will help you to figure out which chapter you should file (as there is more than one type) and how to go through the process. Trying to go through bankruptcy without a lawyer will be a nightmare, so make sure that you hire a reliable and experienced attorney.

7. Redeeming The Loan

All states will allow you to stop the foreclosure by redeeming the property before the sale. Some states may have a specific time period that you can do this for, so you will want to check your state laws before doing so. If you want to redeem your property before it goes to the foreclosure sale, you will need to pay interest, additional costs, and the principal balance. If you wait until after the sale, you will have to pay additional fees, interest, and the purchase price.

8. Contact a HUD Financing Counselor 

Many people know of HUD or the Housing and Urban Development program provided by the United States government for getting those who have low-income affordable housing. While this is an option you should consider in the event you have done everything you can to prevent foreclosure but still lose your home, you should know that they also provide other services. A HUD financing counselor can give you assistant on how to prevent foreclosure of your home and direct you to special programs they provide. It is a great resource to consider when facing foreclosure. 

Conclusion 

If you find yourself facing foreclosure, your first step is to contact your mortgage lender. You never should wait until the lender begins the foreclosure process. If you wait, you will have less chance of keeping your home. If you lose your home, the mortgage lender may end up selling it for less than your mortgage is worth, and you may be responsible for the remaining balance. Working out something with your mortgage lender can help you to stay in your home, keep your credit good, and not have to worry about foreclosure. Facing foreclosure can be a stressful situation. Learn about all the resources you have available to you and get all the help you can.