For a homeowner, there are few things that are scarier than losing your home. When foreclosure documents arrive on your doorstep, or you fear that foreclosures proceedings may soon start, you might think you don’t have any other options. This actually isn’t true in most cases though, and one of the worst things a homeowner can do is to sit back and let foreclosure proceedings continue without doing anything to stop it.
The truth is that there’s a lot that homeowners can do to stop the foreclosure proceedings. Below are just five options you may have available to you.
Understand Your Legal Rights
When facing foreclosure, it’s easy for homeowners to think they don’t have any rights. As they see it, they weren’t able to pay their mortgage and so now, the lender has a right to foreclose. That is largely true, but borrowers also have rights. Likewise, lenders have certain legal obligations they must fulfill in order to foreclose.
Homeowners can understand their rights better by collecting all the files pertaining to their home and the mortgage on it. The documents homeowners should gather include:
- Any promissory notes;
- Any mortgage-related documents;
- A loan modification agreement, if one has been drafted;
- Monthly mortgage payments and escrow payments;
- Any records indicating that a payment or payments have been made;
- Any correspondence with the lender or the mortgage servicer;
- Property tax forms;
- Property insurance forms; and
- The deed to the property.
Thoroughly reading these documents can shed light on the rights a homeowner has. For example, the mortgage and promissory note may indicate that if the borrower repays the amount past due, foreclosure proceedings must stop. These documents may also show that the loan servicer did not fulfill all of their duties prior to filing, such as if they require the borrower to be at least 120 days behind on a loan repayment plan. This stipulation is often included in the mortgage paperwork and means that the servicer can only initiate foreclosure if the homeowner is more than 120 days past due on their mortgage.
Ask Your Lender About a Forbearance Agreement
Anyone facing foreclosure should speak to their lender and ask if it’s possible to set up a forbearance agreement. Under these agreements, the creditor either lowers or stops the loan payments for a certain period of time. The loan will still accrue interest over this time period and at the end of the forbearance agreement, the debtor is required to repay the suspended payments, or the remaining amounts of reduced payments, along with any interest that collected over that time.
In some cases, the borrower may provide the lender with a deed in lieu of foreclosure during the forbearance period. This works as collateral, and if the homeowner still has not made the full payment at the end of the forbearance agreement, the bank can take the home because they already have the deed.
Forbearance agreements are sometimes very attractive for homeowners. After all, if the lender agrees, they are able to keep their home. Still, the lender must agree to the forbearance agreement. If the lender does agree, in exchange for the lender suspending, reducing, or postponing payments, the borrower agrees not to contest any further action taken by the lender in order to collect further payments, even if that action is foreclosure in the future.
Ask the Lender for a Loan Modification
A loan modification is exactly what it sounds like. It modifies the terms within the current mortgage agreement to terms that make it easier for the borrower to repay the loan. Primarily, the terms changed are those of the loan repayment period, which is sometimes extended, or the interest rate, which is reduced.
Extending the loan repayment period allows more time for the homeowners to repay the loan. Due to the fact that the amount left on the mortgage is spread over a longer time period, the amount of monthly payments is often reduced, further giving homeowners a chance to repay the loan. Reducing the interest, of course, also reduces the monthly payments.
Like a forbearance agreement, lenders must approve a loan modification, and borrowers must make a convincing case when requesting one. In some instances, homeowners are eligible for a Freddie Mac Flex loan modification, or a Fannie Mae loan modification.
Ask Your Lender About a Short Sale
Sometimes, a homeowner can avoid foreclosure by simply selling their home. They most often have to sell it for an amount that is less than what is currently owed on the mortgage, though. This is known as a short sale. Selling a home in a short sale is complicated. There are some homebuyers who only look for short sales, because they know they are going to get a deal on the home. However, homeowners cannot just sell their home and tell the lender that they no longer own it.
Like so many other options for avoiding foreclosure, lenders have to agree to a short sale. This is because once the sale is final, there is no way for them to recover the amount still due on the mortgage. Still, lenders are often happy to at least recover some of the loan’s balance rather than take a home back that they will have to sell and invest a great deal of time in.
Contact a Lawyer Who Can Help
Facing foreclosure doesn’t necessarily mean you’re going to lose your home. You do have options, but none of them are guarantees, either. It’s for this reason that anyone facing foreclosure should speak to a Fort Lauderdale foreclosure attorney.
If you’re in the middle of foreclosure proceedings, or you fear you might soon be in that position, contact Loan Lawyers today at (954) 523-HELP (4357). We will negotiate with the lender on your behalf, and work tirelessly with you to try and avoid foreclosure. Those that go through this process alone have a small chance of stopping foreclosure. Increase your odds and get in touch with us today for your free consultation.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.