Avoiding The Foreclosure Process

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The foreclosure process can be frightening for many people. Foreclosure is the legal term used when your lender repossesses your home for non-payment of your mortgage. The foreclosure process could seriously affect your ability to qualify for credit in the future. If you fall behind with your mortgage payments, you should head off the foreclosure process if all possible.

<h3>Before Your Lender Starts The Foreclosure Process</h3>

Starting the foreclosure process is a reaction, not an action, and the foreclosure process can be avoided with calm decisions and careful planning.

It is important to manage the foreclosure process proactively.  If you believe your lender is about to start the foreclosure process, get on the front foot, pick up the phone, and engage with your lender.

Lenders do not want to foreclose, and will usually work with you to get you back on track with your mortgage. Lenders are much more inclined to work with you before they start the foreclosure process, or at least before they have reach legal judgement stage. By contacting, rather than avoiding, your lender at the time they are starting the foreclosure process, you can end up with a workable solution. If you are a homeowner and you believe your lender may be starting the foreclosure process, you should contact a HUD-approved housing counseling agency immediately.

<h3>After Your Lender Starts The Foreclosure Process</h3>

In some cases where your lender has started the foreclosure process, it may be possible to negotiate to modify the mortgage. Mortgage loan modification may include decreasing interest rate, re-amortizing the remaining balance, or extending the term of the loan. Loan modification is also referred to as a workout or restructure, and is a useful way to head off the foreclosure process before you lose your home.

You may be able to negotiate a delay in the foreclosure process to give you time to sell your your house, but make sure you can sell it by the planned date. Lenders do not take kindly to delays. If the house isn’t sold by the promised date, there is no turning back. This makes is particularly crucial that you start negotiations as early as possible.