How to Stop Foreclosure

Foreclosures don't happen without a notice. Mortgage lenders and banks typically allow the homeowner to catch up on the mortgage payment, or make specialized arrangements before the property enters pre-foreclosure. Homeowners are usually given three months to rectify the problem. Several factors contribute to foreclosure such as loss of employment, serious illness, etc. Missing a single mortgage payment will not initiate a foreclosure. Some people make the mistake of disregarding the problem, or waiting until the last minute to take action. If you have difficulty paying the mortgage, selling the property could save your credit and investment.

2. Contact Your Mortgage Lender

Don't wait for the mortgage lender to contact you. At the first sign of payment problems, call your mortgage lender and negotiate new payment terms. Some mortgages have provisions to assist homeowners who experience financial difficulties. Depending on the type of mortgage loans, some lenders may defer mortgage payments for a certain amount of months. During this time, payments are not required. Another option is a mortgage forbearance, wherein payments are temporarily canceled, but interest continues to incur. Homeowners can also prepare for unforeseen financial troubles with a mortgage insurance policy. Policies vary. However, many offer provisions to assist homeowners who encounter short-term disability or a death in the family.

3. Deed in Lieu of Foreclosure

A home foreclosure will destroy your credit, and make is nearly impossible to purchase a future home. Fortunately, there is a less damaging alternative. Rather than lose your home to a foreclosure, ask the lender to accept a deed in lieu of foreclosure. This procedure involves a homeowner "giving back the property," and the lender forgiving the debt. Another name for this process is a voluntary repossession. Several mortgage lenders prefer this alternative because it cost less and the process is quicker than a foreclosure. It's a win-win situation for the lender because they are usually able to re-sell the property at market value.

4. Reduce Mortgage Payments

Modified mortgages are rare, but some lenders are willing to negotiate new repayment terms. To qualify for a mortgage medication, homeowners must meet certain requirements. Requirements differ from lender-to-lender. On average, the homeowners must be temporarily unable to work due to disability or injury. Additionally, if the breadwinner dies, the surviving spouse may be eligible for temporarily reduced payments. Modifications may also include extending the mortgage term, wherein the homeowners receives permanent reduced payments.