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What are Some Options if You’re Facing Foreclosure

Posted Friday, December 13, 2013

When you bought your home, you didn’t do so with the intention of missing payments and defaulting. Unexpected life circumstances like loss of a job, death or divorce can quickly put a crimp in good intentions. When this happens, you may not be able to prevent default, but you can be proactive with your response.

Don’t do nothing. Some homeowners fall behind, acknowledge lateness but procrastinate and let the process take its course. Just because you missed payments doesn’t mean you automatically no longer own your home. You have options, just don’t wait until it’s too late. Take a look at your finances. Are there other things you can eliminate from spending or stuff you can sell to free up cash, or additional sources of income to help with your payments?

The first thing you should do, call your lender. Be proactive, don’t wait for them to send a letter or notice of default. They may drag out several months which will reduce options available to you. Explain what’s going on and ask what suggestions they have. The bank may be able to restructure your payments or refinance the loan at a lower payment. The bank does not desire to eat the cost and the time it takes to go through foreclosure. If your lender offers a solution that will work for you, get it in writing. You need to be protected in the event that they do not live up to their offer. Before you sign, it is wise to have documents reviewed by a real estate attorney or local housing agency.

This decision will need to be made quickly, but if you are not able to stop foreclosure and owe less than what your home will sell for, selling it is an option. Selling before foreclosure, gives you some cash to walk away with and avoid negative impact on your credit score. In this case you want to contact your lender, notify them that you are putting your home up for sale and request they stop the foreclosure process to give you enough time.

Consider selling your home fast to an investor. Investors can close quickly which may be ideal when facing deadlines from your lender. Some investors may even lease your home back to you with an option to purchase. You benefit from some equity and save yourself from destroying your credit. If you do work out this type of arrangement, it is important to have the deal reviewed by a professional.

Beware of scams. Sometimes when people are in the worst possible situation, scammers come out of the woodwork to take advantage of you. No matter which course of action you choose be sure that you are dealing with a reputable company, agency, agent or investor. One scam is an offer to pay off your mortgage if you Quit Claim Deed the home to them. You move out, a tenant moves in and down the road you find out that your mortgage balance was never paid, leaving you responsible to the bank. There are also fake agencies that claim to help you with your mortgage woes for a hefty fee. You pay the fee, they do nothing to help.

If you need to sell your home fast the best course of action is to speak with your lender and a real estate professional that can advise you on the best course of action for your situation.