The one word that strikes pain and fear in homeowners is Foreclosure. But today, being threatened with foreclosure or even receiving formal notices from the bank doesn’t mean you’ll lose your home. You still have some options.
Negotiating with the Lender
Your best approach is to start negotiating with your lender as quickly as you can.
• You may be able to get temporary relief from having to make monthly payments (forbearance).
• A plan to make up for missed payments, at the end of your mortgage
Of course, there are many stories I’m sure you’ve heard where lenders won’t return phone calls or simply refuse to negotiate; however, it is always wise to start with this option since later down the road, you can bring this up as a defense to show they wouldn’t cooperate early on. You can negotiate directly with the lender or work through a non-profit housing counseling agency.
Filing for Bankruptcy
Chapter 13 – with this type of filing you are able to develop a plan for making your regular monthly payments and paying off the arrears. If the bankruptcy court approves your plan, you’ll have between three and five years to make your payments. Chapter 13 also reduces or eliminates your total debt load, making your mortgage more affordable. In many situations, you can eliminate a second or third mortgage and reduce your first primary mortgage to the market value and probably reduce the interest rate to just above the prime rates.
Chapter 7 – with this type of filing you are able to wipe out your unsecured debt like credit cards, personal loans, medical debt, judgments, etc. This will free up more of your funds so you can place the money towards your mortgage. Chapter 7 may not be appropriate for you; because of the equity, if any, in your home, a Chapter 7 filing could trigger the sale of the home.
Fight the Foreclosure in Court
If you can show that the lender or mortgage servicing party violated your state or federal rights, you may be able to derail the foreclosure, at least temporarily. An increasing number of courts are siding with the borrower when it comes to presenting documented evidence of ownership. Because of the way mortgages have been sold and resold, the evidence is either lost or procedurally inadequate, meaning, your paperwork was not completed correctly.
Violations of federal lending rules and other federal and state laws regarding consumer transactions may provide protection against foreclosure.
It’s very important to contact a lawyer and if you cannot afford one, get in touch with legal aid to see if you are eligible for free legal representation.
Disclaimer: Do not construe this information to be legal advice; nothing in this article should be construed by you as a source of a legal relationship. This Legal Information is solely intended for general informational purposes only.
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