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The best way to stop foreclosure is to prevent it from happening in the first place. Excessive debt, adjustable-rate mortgages, lack of emergency resources, buying a home you can’t afford and other circumstances beyond your control can lead to financial problems that can result in foreclosure. It’s important to take action early, before you miss any payments. It’s also a good idea to talk to a housing counselor and consider other options for keeping your home, such as loan modifications.
Foreclosure occurs when a lender seizes and sells a property that’s been secured by a mortgage as payment for the borrower’s default on the loan. Foreclosure can damage your credit score and make it difficult to get loans in the future, but there are ways to stop it. Here are six steps you can take to avoid foreclosure and save your home.
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1. Work with your lender.
The quickest way to stop foreclosure is to contact your lender and let them know that you’re having trouble paying your mortgage. Your lender can then help you create a plan to make up for missed payments. Some lenders have special programs to help homeowners with foreclosure prevention, including a loan modification. Others may offer deeds in lieu, where you agree to hand over the property to your lender and stop paying on the mortgage. This option can take less time than a foreclosure, and it may not affect your credit as severely.
2. File for bankruptcy.
If you’re already behind on your mortgage and a foreclosure sale is imminent, filing for bankruptcy can stop the foreclosure process and give you a three- to five-year payment plan to catch up on your debt. You can even file for bankruptcy if your home is already in foreclosure, but it’s important to act quickly.
3. Hire a foreclosure defense attorney.
A bankruptcy lawyer is familiar with foreclosure cases and will be able to review your mortgage agreement for any legal loopholes that could help you buy more time for repayment or reduce your debt. In some cases, your attorney will be able to stop the foreclosure before it starts by filing a lawsuit against the lender on your behalf.
4. Talk to a HUD-approved housing counselor.
A reputable HUD-approved housing counselor can teach you about your mortgage rights, help you develop a budget, and connect you with resources that can assist with foreclosure prevention. It’s important to find a counselor as soon as possible, because foreclosure prevention counseling is free and available through many local agencies. Beware of scammers, however, who charge for foreclosure prevention services. They’re often predators who try to steal your money or your home. Also, avoid mortgage modification companies that require upfront fees.
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