Foreclosures were common in 2009 when a record 2.8 million houses were foreclosed on. Since the recession, fear and uncertainty have risen with regard to property ownership.
Though they’re less common now, foreclosure notices are still sent out across the US. It can be a terrifying feeling to receive that yellow notice in the mail. The most common reason it comes is that you’ve fallen behind on your mortgage payments.
Whatever your reason for defaulting, the notice of foreclosure can be overwhelming. If it happens to you, please be assured that you have rights.
You don’t have to accept a foreclosure without a fight, and you may be able to reclaim your property if you follow certain steps. With the counsel of a qualified lawyer and an understanding of how a foreclosure works, you can protect your home and assets.
Here are 11 essential steps to take.
- Call a Lawyer
After you receive a foreclosure notice, the first step is to contact an attorney. A qualified lawyer can help you identify your rights and establish grounds to dispute the foreclosure. Discuss your legal options with a qualified professional as soon as possible.
- Communicate with Your Lender
Talking is key to a positive outcome. Most lenders are more concerned about getting their money than they are about obtaining justice for its own sake.
If you explain your circumstances and why you defaulted, the bank or credit union may be flexible and willing discuss other options. Keep in constant communication with the lender during negotiations, even if that means calling them every week.
As long as they see you’re committed to keeping your house and repaying the loan, lenders are likely to go for a mutually advantageous deal rather than pursue a foreclosure.
- Explore Refinancing Options
If you’ve defaulted because you can’t afford your current mortgage conditions, it might be time to refinance. Request a mortgage with lower monthly payments, which means lower interest rates and a longer repayment period. Shop around and talk to your lender about the options.
- Modify Your Mortgage
In some cases, you may qualify for a federal mortgage relief program. If so, you can legally modify your mortgage and arrange new, more affordable monthly payments.
These relief programs allow you to refinance or alter your loan so you can better afford your payments. Your lender or attorney can help you locate a government program that matches your needs the best. Some of the most common include the Fannie Mae, Freddie Mac, and Home Affordable Foreclosure Alternative programs.
- Read the Fine Print
You can often find clues to escape foreclosure in the fine print of your agreement. Comb through emails and other correspondence you’ve received from your lender.
You probably started receiving foreclosure notices 30 days after your final past-due notice, so go back that far. Also, look at your mortgage documents for any information that could work in your favor.
You should also research foreclosure laws in your state. Check the timeline, grace period, deficiency judgments, and other paperwork associated with your foreclosure. Show this information to a lawyer, and see if you can find something that will save your home or at least explain the foreclosure.
- Cure the Default
If you haven’t waited too long, you might be able to reinstate the default on your mortgage. In other words, you can pay what’s owed and get back on track with your regular payments.
The amount of time you have to cure the default depends on your mortgage agreement and state regulations. In most cases, curing the default is possible only if you cover the entire overdue balance.
Some foreclosure situations will require you to pay the remaining amount of your mortgage in full. This isn’t easy for most people, but you may be able to tap a retirement fund or other source of cash to save your home.
- Try to Redeem Your House
If your home gets taken from you because you defaulted, you might be able to get the house back as long as it’s reclaimed before the foreclosure sale. Redemption is admittedly difficult to achieve because it requires you to pay your mortgage balance in full.
On top of that, you’ll have to cover lawyer fees, damages the bank suffered because of your default, collection fees, court costs, and other financial obligations required because of your foreclosure. Any outstanding balances can prevent you from regaining your property.
- Sell to Avoid Foreclosure
Redeeming your home or curing the default might not be possible, but you don’t have to lose everything. You can regain some of the equity you put into your house and prevent the foreclosure from harming your credit history by selling the property before the bank can take action.
Selling would absolve you of all debt and put the home back in the hands of the lender. If you can’t sell the home quickly at full price, try a short sale, which means you underprice the home in order to sell it quickly.
You won’t get the full value out of the property, but you’ll have enough to prevent a foreclosure from staining your records. Note that selling your home in lieu of a foreclosure can only be done if the lender agrees. Their compliance will depend on your history with them, what’s owed on the mortgage, and current market conditions.
- File for Chapter 13 Bankruptcy
If you’re in a foreclosure and you can’t see a viable exit, filing for chapter 13 bankruptcy may be your best option. This will let you go back to making regular mortgage payments on your home. It’s like a fresh start on your existing mortgage.
It enacts an automatic stay of the foreclosure, so you won’t lose your home to the bank unless you stop making payments. If you make payments consistently following a declaration of bankruptcy, you may be able to keep your home.
- Protect Your Credit
If you’ve defaulted on a loan, your credit will suffer. A foreclosure has even more serious credit implications. It can leave a long-lasting mark against your credit score, and make it difficult to purchase a different house or get another loan.
It will typically take about seven years to repair the damage. Taking steps to stay your foreclosure and cure your mortgage is the best way to protect your credit. Filing for chapter 13 bankruptcy can also remove the threat of a foreclosure on your record.
If the foreclosure gets completed, all is not lost. Commit yourself to making on-time payments and keeping up with your loan obligations during that time frame. With time, the black marks will disappear, and you can get your life back.
- Have a Backup Plan
Things might not go as you hoped when you face foreclosure. If you lose your house, think about where you’ll go and how you’ll handle the aftermath. It’s worthwhile to do everything you can to prevent a foreclosure, but don’t let that stop you from starting anew.
Contact the Rowdy G. Williams Law Firm Today!
Many people try to handle foreclosure notices on their own, but they fail to stay the judgment. Usually, they don’t fully understand what a foreclosure means and what their rights are, but our attorneys do.
We have a full team of lawyers who can help you understand your foreclosure, identify your rights, and take action to minimize the damage. We specialize in foreclosure defense and chapter 13 bankruptcy, so no matter how you’d like to fight your foreclosure, we can help.
To schedule your free initial consultation, call today!