How to Stop Foreclosure Legally

Nobody wants to lose their home to foreclosure. However, unfortunate events do occur, in which many people are unable to pay their home loan payments. On average, lenders start the foreclosure process once mortgage payments are three months late. However, there are ways to legally stop foreclosure. You’ll need to communicate with your lender and devise a workable strategy.

Instructions

1. Keep the house on the market. It can take between three and six months to sell a home. Even if your home is about to enter pre-foreclosure, keep the property listed with a realtor. Someone may make an offer on your home, wherein you can avoid foreclosure.

2. Talk to your lender about forbearance. Mortgage forbearance is a provision that temporarily stops home loan payments. Therefore, owners can remain in their property and legally stop foreclosure. To qualify for this provision, owners must submit proof of temporary financial hardship (loss of employment, short-term disability or injury). Forbearance periods are typically three to six months.

3. Negotiate a repayment plan. If you’re behind on your mortgage payments, ask your mortgage lender to establish a new repayment plan. In most instances, the lenders extends the loan term. For example, if you’re four months late, the lender may agree to extend the mortgage term by four months.

4. Ask for a mortgage modification. Normally, borrowers would have to refinance their loan to receive better terms. With a mortgage modification, lenders willingly alter the loan terms, and they don’t require a refinance. Lenders may reduce the mortgage interest rate or freeze the adjustable rate, which helps borrowers afford the payment.

5. Arrange a short sale. Foreclosure proceedings are costly for the lender, and they prefer borrowers to sell the home. Some lenders allow short sales. Therefore, borrowers can sell the property for less than the balanced owed on the loan. The lender accepts the smaller amount, and the borrower legally avoids foreclosure.

6. Apply for a refinance. Sometimes, a mortgage refinance can stop foreclosure. Borrowers apply for a new home loan with a better rate and terms. The new loan terms often result in lower, affordable mortgage payments. Apply for a refinance before the property enters pre-foreclosure.