Foreclosure is a legal procedure where a lienholder, usually a bank or a mortgagee, attempts to regain the entire amount of a mortgage by force selling the asset used as collateral for that loan. It is a very dangerous financial practice that has left thousands of homeowners homeless and jobless. The number of homes repossessed through foreclosure is at an all-time high. In addition, the number of homeowners taking out mortgages on residences that are heading towards foreclosure is also increasing. This is a situation that is beyond your control, so you should do what you can to prevent it. When it comes to a mortgage, the most asked question is Can You Prevent Foreclosure Through Mortgage Forbearance? This article will go deeper into the answer.
First, before anything else, you should call the bank and ask them if they have filed any type of foreclosure action against your property. If the answer was yes, then you are in violation of the law. You should also ask them to provide you with the paperwork that you need to file with the court requesting a stay of foreclosure from the court. The bank simply needs to serve you with a written demand letter that tells you that you are in default of your loan contract, and will enforce this through a court order.
Next, you should contact your mortgage lender and find out what your options are. Foreclosure is not a common practice in all states, so your lender will likely have specific guidelines in place. Your mortgage lender or broker will probably be able to tell you the latest information on the foreclosure process as well as give you options to save your home. These options will include showing proof of income and expenses, along with a current, up to date, copy of your loan documentation. Once these documents are submitted, your lender can then make their decision on whether to proceed with the foreclosure or seek other options to stop foreclosure.
If your mortgage lenders refuse to work with you, then it is time to look at some of the alternate sources of funds that you can use to stop foreclosure. One very effective source of funding that has recently become popular among homeowners in difficult financial times, is REO properties. REO properties are properties that are owned by the bank and in need of repairs. Many mortgage lenders will sell REO properties for significantly less than they are worth and can help a distressed homeowner save his home by helping him save his mortgage payments.
When a bank takes a property into foreclosure, they are required to put it on the auction block. An auction is when the bank sells off the property in an auction to the highest bidder. The auction starts at the highest bidder price, and the buyer can buy the property as is, or can make a profit by repairing any problems with the property. Auctions are public notices where the public can attend to bid on a particular item. In some states, the winning bidder must pay a percentage of the cost of repairs to the bank’s expense, but in most states, the winning bidder is responsible to pay for all expenses.
Another option available to a homeowner facing foreclosure is to take advantage of a short sale. A short sale occurs when the mortgage company sells the house at a lower price than the current mortgage payment. The homeowner and the mortgage company negotiate terms on how long the home will be offline, and the homeowner then signs a deed in the property relieving the mortgage company of all future obligations. Short sales allow the homeowner to get out from under the mortgage payments, and allows the mortgage company to recoup some of their losses.
The third option for a homeowner who is facing foreclosure, is to try to sell their home themselves. This option requires hiring a reputable real estate agent to market the property, and to perform the necessary inspections to ensure the property meets the requirements to qualify for the bank’s pre-foreclosure program. A real estate agent will also be able to list the house on the MLS, or Multiple Listing Service, which is a national system that allows multiple lenders to list properties on the same basis.
The third, and maybe most important, was that a homeowner can save their home from foreclosure, is to do everything possible to have the foreclosure auction occur as quickly and as orderly as possible. Most banks offer the opportunity for default and auction to occur only 90 days before the end of the term of the loan, known as the acceleration period. This means that by the time the bank has run out of foreclosure auctions to conduct and has not purchased the home at the lowest cost possible, the highest bidder has already been chosen.