Legal Ways to Stop Foreclosure and Save Your Home

The headlines are dire and growing more dire with each passing day. According to housing experts, one in every ten homeowners in the United States is at least one month delinquent on their mortgage payments. The number of families facing foreclosure and the loss of their home is higher now than it has been since the Great Depression. If your family is one of those facing foreclosure, there are several different legal strategies you can use to stop foreclosure and remain in your home.

Evaluate Your Circumstances

Your first step should be to evaluate your current financial position and decide if it is really financially feasible for you to remain in your home. Credit experts state that your housing and insurance costs combined should be no more than 40% of your monthly budget. If your housing costs are currently more than 40% of your budget, you may be better off trying to sell your house and work toward repairing your credit.

Check with Local Housing Resources

Next, check with local housing assistance agencies for the most up to date information on government programs and locally available private non-profit agencies. Many local communities are stepping up and forming housing coalitions to assist homeowners facing foreclosure in order to preserve housing for families in their cities and towns. The services available range from free legal assistance to budget assistance to negotiating with mortgage companies on your behalf. Since these programs are locally created, your best shot for getting help is to call your local government offices and ask about any special programs in your area.

Negotiate with Your Mortgage Company

If your history of repayment has been typically good, negotiating with your mortgage company may be your best option. Many bank and finance companies have instituted new policies to prevent foreclosure. They may be willing to reduce payments temporarily or even to readjust your interest rate. Depending on your current circumstances, some may even be willing to renegotiate your current mortgage into a longer term to lower your monthly payments.

Negotiate a Mortgage through Another Lender

If renegotiating through your current lender isn't a possibility, you may be able to work out second mortgage through a different lender. This option may work for you if the remaining balance on your current mortgage is less than the current value of your home minus your equity in your home. For example, if your house is currently worth $120,000 and you have $95,000 remaining to pay on your mortgage, this option may be available to you.

Turn to a Non-Profit Credit Repair Agency

If your attempts to negotiate with a lender on your own behalf don't work, you can call in reinforcements. Non-profit credit repair agencies will negotiate on your behalf with your creditors, including your home mortgage lender, and attempt to work out payment plans that work with your budget. Most credit repair agencies aim to have you solvent within two to five years.

Last Resort - Bankruptcy

Declaring bankruptcy should always be your last resort, since it will have an effect on your credit rating for years to come. A Chapter 13 bankruptcy, however, can help you pay off your current debts over the next three to five years while still retaining your home and many of your assets.