How to Survive Losing a House to Foreclosure

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Being foreclosed by an banking institution is the number one problem for the government and the people that are homeowners. Deciding what to do after you have been foreclosed on is critical in rebuilding not only credit, but everyday life. Trying to figure out what to do first can be overwhelming, but taking everything in a systematic order is beneficial. While still occupying the residence there are still some solutions depending on your situation.

Things You'll Need

  • Seek Legal Counsel
  • Write down finances
  • Try to sell home
  • Refinance if possible
  • Ask lender about mortgage adjustment
  • Address the mortgage company directly. Find out what your options may be. Ask the mortgage company whether you are entitled to a forbearance, mortgage adjustment, or a buy back. Doing a forbearance is when you have a financial hardship, one mortgage payment gets eliminated and usually tacked on to the end of the payments, so that you can catch up on payments. Adjusting a mortgage is done by taking your income and using this information to determine how much you can afford to pay. Buying back the mortgage this entails you selling the property back to the mortgage company.

  • Check into filing bankruptcy. This may delay the process for 30 days, which could lead to a repayment plan. Filing bankruptcy requires contacting a bankruptcy attorney. Set up an appointment. Take all financial documents such as mortgage documents and any other financial debt with you. The bankruptcy lawyer will file a motion with bankruptcy court which will cease any pending action against the home. Filing a chapter 13 establishes a repayment plan with the mortgage company for any outstanding mortgage payments on your account which will allow a five year repayment plan. This will be a consolidated payment each month that is usually taken directly out of your pay check.

  • Contact a mortgage broker to refinance the home. If there is enough equity in the home, you may be able to refinance, though the interest rate would most likely be on the high side. Make sure you shop around for a broker. Some brokers may be able to get better deals than other brokers. Also, brokers deal with different banks. While one bank may not want to refinance you, another bank not in that broker's portfolio may refinance you.

  • Attempt to sell the house before the foreclosure. This may not be enough money to cover what you owe the bank. If this is the case you can request a short sale from the lender, they can deny this or approve it. Trying to qualify for a short sale of the property has to be negotiated with the mortgage company. Contact the bank directly and negotiate to sell the home to a third party for less then what you owe the bank. Banking institutions will allow this with anyone that is about to be foreclosed on. Banking institutions pay more money in legal fees to foreclose then to allow the short sale. Staying in constant contact with the mortgage company is key to unloading the property in a short sale. More mortgage companies are receptive to making several arrangements in order to not have to foreclose on property.

  • Request a deed in lieu of foreclosure. This is where you give the home back to the lender.

  • Speak to the investor that purchases your home. She or he may allow you to stay if you can afford to pay the rental amount.However, the best option maybe a clean break to start over and just rebuild your finances. There is life after foreclosure, finding affordable housing, which will allow you to save maybe a better solution.

  • Move in with a relative while rebuilding your credit. This is also a better solution then acquiring an apartment. This will allow the time to rebuild your financial stability and to figure out what to do for the future. If the circumstances happened due to a loss of income, then securing a place of employment is critical. Make a set arrangement with the relative so that you can save while living with them. Figuring out how much money needs to be saved before trying to acquire another place is key.

Tips & Warnings

  • The emotional attachment of a home can cause stress but rebuilding can happen.
  • Take time out to figure out what went wrong and what not to do so you can buy again.
  • In some instances, banks are offering cash to leave the premises and forfeit the keys to the home. In this case, if the auction is coming up in days, getting the cash may help with being able to secure an apartment.
  • Seek legal counsel for bankruptcy and or foreclosure assistance.
  • If you occupy the home after the foreclosure sale, the new owner has the right to start the eviction process. The new owner can post a legal notice for eviction of the premises within 72 hours (this may vary by state or local laws). In order to avoid the stress the best solution at this point is to vacate the home.

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