Foreclosures FAQs

What is Home Foreclosure?

Home foreclosure is not something you would want. When your home is up for foreclosure, it means that the homeowner cannot pay off the principal and/or interest payments on his or her mortgage. Because he can’t pay, the lender – bank, building society organization – may seize and sell the property, as stipulated in the contract. These should all be stipulated in the contract.

What happens when I miss my mortgage payments?

If you miss your mortgage, there is a possibility that your home could be foreclosed. Foreclosure is one legal means that your lender can do to reclaim you home. Once it occurs, you will be required to vacate your home. If your house is worth less than the total amount you owe on your mortgage loan, you may pursue a deficiency judgment.

You should avoid foreclosure and deficiency judgments to happen. Having these in your credit record will definitely affect your ability to qualify for credit.

What should I do to avoid Foreclosure?

If you find yourself having any difficulty making your monthly payments, contact your lender’s Loss Mitigation Department right away. Explain to them your situation at the same time provide them financial information that would show your current status. Financial information may be your monthly income and expenses. This information is essential for them to determine how they may help.

Consider these three rules to avoid foreclosure:

Rule #1: When you know you’re payments will be late, inform your lender as soon as possible

Rule #2: Do not ignore your lender’s letters or phone calls. No matter how much you try to ignore them, they won’t go away anytime soon.

Rule #3: Do not assume your financial situation is hopeless.

What are some alternate solutions for long-term problems to avoid Foreclosure?

Mortgage Modification

If you have been making your regular payments, but are currently struggling to keep up with the past due amount, contact your creditor and inform them about your situation. They may agree to modify your mortgage to an amount you can deal with. A possible solution to this is adding your past due amount to your existing loan, then, financing for the long term.

Also, if you can’t any more make the payments at the former level, modifying your loan is also possible. One viable option is to modify your mortgage and extend the length of your loan, or other solutions to reduce your payments.

Pre-foreclosure Sale

Pre-foreclosure sale is another way to avoid actual foreclosure. With pre-foreclosure sale, you sell your current property for an amount less than necessary to pay off your mortgage loan.

You are qualified to do this if you meet the following requirements:

1)    You are at least 2 months delinquent.

2)    You’ll be able to sell your property within 3 – 5 months

3)    The new appraisal, which your lender will get, shows that the value of your property is within the guidelines of the program.

Deed in Lieu of Foreclosure

If applicable, the lender can forgive your debt and allows you to giveback your property. This can still affect your credit record, but not as severe as a foreclosure.

Usually, the lender will require you to sell the house first for a specific time before they consider this option. However, this option may not be possible if there are other liens against the property.

For FHA Loans

Your creditor or lender may be able to assist you in getting a one-time payment from the FHA Insurance fund. Your loan should be at least 4 months and has not exceeded 12 months due. Furthermore, you must prove that you can make full mortgage payments. In addition, you must have a signed promissory note, which allows HDU to be filed as a replacement for your property for the amount received from the fund. The said note is interest fee. However, this must be repaid; it only becomes due when you already paid off your loan or when you’re planning to sell your home.

For VA Loans

If you’re having problems with your VA Loans, contact VA Regional Loan Centers. VA loan centers are centers that allows you to avoid foreclosure

What are some alternate solutions to temporary problems to avoid Foreclosure?

Reinstatement

It may be possible to reinstate your loan, especially when you are already behind your payments. This can be done if you can assure your lender to pay a lump sum to bring your payments up to date by a specific time.

Forbearance

Forbearance means you are allowed to make delayed payments for a short period of time. This is with the understanding that, afterwards, another option can be used to bring the account current. Sometimes, lenders may let you combine Forbearance with Reinstatement if you know that you’ll have the funds to bring your account current at a specific date.

A Repayment Plan

If you have been late with your payments for the past few months but are now able to pay again, your creditor may let you add a percent of your past due amount to your next monthly payments. This will be done until your account is updated.

Partial Claim

If you would like to acquire a one-time payment from the FHA-Insurance fund so you can make your mortgage up to date, contact your lender and they may be able to assist you.

The following criteria must be met if you want to qualify for this program: 1) you must be at least 4 months behind and no more 12 months behind with your payments, and 2) you must be able to start paying the full mortgage amount.

When your creditor files a Partial Claim, the US Department of Housing and Urban Development will be the one to pay your lender the amount needed to make your mortgage up to date. For your part, you should create a Promissory note, and then a Lien will be placed on your property. The lien will be in effect until you pay the Promissory note in full..

The Promissory note is free of interest. It is due when you pay off the first mortgage or when you sell your property.

How do I know if I qualify for any of these solutions?

To find the best solution for your needs, our company will be assisting you. What is important is that you are dealing with your credit issues as soon as they arise. If you wait longer to face your foreclosure problem, you’ll risk spending more or worse, lose your property.

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