Learning how to prevent foreclosure in the first place may be one of the easiest ways keep your home. If you are in fear of missing a mortgage payment, or if you’ve already missed a few payments, then you need to act quickly, before the foreclosure process starts. In general, you’ll be able to miss 3 payments before the foreclosure process starts. Somewhere between the third missed payment and the fourth missed payment, your lender will file a notice of default and the process will officially begin.
Before they send the foreclosure notice, it’s time to get to work and come up with as many options to catch up your payments as possible. There are many ways to prevent foreclosure and stop foreclosure, but for this page, we’ll assume that you’re trying keep your lender from filing a notice of default (which officially starts the foreclosure process and makes it part of public record).
The number one way to prevent foreclosure, when you haven’t missed a payment, or when you’ve only missed one payment, is to refinance. This is different that a “foreclosure loan”, because you are not yet in foreclosure. This is just a normal, or traditional refinance. When you refinance, you’ll get a 2-3 month “grace period” before any payments are due. This should give you enough time to get things back in order and it’s a very successful foreclosure prevention method.
Another option to prevent foreclosure is to file a lawsuit against your lender. In many cases, lenders have committed a form of mortgage fraud when they provided the original loan. For example, they may not have informed you about the adjustable rate mortgage. This happens a lot and will slip by borrowers at closing, or maybe they didn’t have any other choice, so they just signed anyway. Either way, this is fraud. Another form of mortgage fraud is when a broker gets an inflated appraisal to get your loan approved. This is illegal and you have a right to demand resolution. There are many types of mortgage fraud, so if you think you’ve been taken advantage of, then you should contact us immediately so we can put you in contact with a qualified attorney to handle your case. This method of foreclosure prevention can stop foreclosure immediately and even get you a lower fixed interest rate loan.
The third option we’ll talk about for foreclosure prevention is simply paying the arrears. This is an option that only works if you had a temporary hardship, but you have recovered and you can now make the mortgage payments again. If you are only one or two payments behind and you have a good interest rate, then you just need to raise the money to pay off the arrears. The first thing you should do is contact your lender and ask for a repayment plan for the missed payments. This will allow you to pay back the missed payments a little at a time. You should also them to eliminate the fees and interest on the arrears.
Once you’ve established a re-payment plan, you need to raise as much money as possible.
Ask for overtime at work or get a second job. Ask family members who are old enough to work to contribute to the cause. Once everyone is working as much as possible, start selling all the unnecessary items around the house. You can use the local classified ads or go online with ebay or craigslist. Extra cars, bikes, furniture, clothes, these items can all be sold to help make up the extra payments. Once you get back on your feet, you’ll be able to replace anything you sold, so just do whatever is necessary to prevent the foreclosure.
After the missed payments are caught up and your mortgage is current, you need to take a good look at your monthly budget. You need to figure out what monthly expenses can be converted into savings. It’s important to have excess income that is put into savings for future emergencies. Most families have a minimum of $500 of frivolous spending each month. Turn this into savings and plan for the future, including unforeseen emergencies.