When you are facing foreclosure and defaulting on your mortgage, your stress levels are probably close to going through the roof. It is time to calm down and take action, here I will go over some simple solutions to help you avoid foreclosure.
Talk to Your Loss Mitigation Department
First of all don’t just give up right when you receive a foreclosure notice. If you get the notices it doesn’t mean you need to pack up and move it, you can stay and try and stop the foreclosure. If you prematurely move out of your home, you also may be disqualified for some assistance programs. Many lenders have a loss mitigation department that can give you some options. You first step is the call the loss mitigation department and tell them you circumstances and see what options are available for you.
Speak With A HUD Approved Housing Counsel
Next you may also want to contact a HUD approved housing counseling agency. They will provide you a ton of free information ranging from government aid to local community organizations.
Check To See If You Qualify For Special Forbearance
If you have recently experienced a reduced income or an unexpected increase in bills, you may qualify for Special Forbearance. This is where the lender may provide you with a reduced payment plan or possible a suspension of payments, until you get back up on your feet. You will of course have to provide proof that you are experiencing serious financial problems.
Explore A Partial Claim
Another options you may what to look into is a partial claim. This is where the FHA-Insurance fund can bring your mortgage up to date by giving you a temporary interest free loan. You can may only qualify for a Partial Claim if you are over 4 months delinquent but no longer than 1 year. You will be required to make full mortgage payments after the lien is placed on your payments are caught up. The partial claim amounts will either be due when you sell the home, or the mortgage payments are complete. If you do go with this option, make sure you have financial security, because you will be required to make full mortgage payments after the partial claim is in effect.
One of the most common options is to ask your lender to provide you with some type of mortgage modification. This will allow you to refinance the amount of the debt or extend the time line of your loan, which will help reduce your payments. Make sure if you ask for this, you can keep up with the new payments; it won’t be good if you default on those as well.
Give Your Property Back
If you have tried all the other options to avoid foreclosure and nothing has worked you may consider giving your property back to the bank. This is known as a Deed in-lieu of foreclosure; you give you deed to the lender, instead of being foreclosed on. Most of the time this is away to save your credit, but you will loose your home. You may not pick this option though if you have any other FHA loan in default.
Hopefully one of these options will give you some ideas on how to stop foreclosure. There are many solutions out there, you just need to talk to the right people and find out which one works best for you and your circumstances.
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