How to Walk Away From A Mortgage And Stop Home Mortgage Foreclosure

You're done your best to stop home mortgage foreclosure, but despite cutting corners you are still just barely making your mortgage payments. Now you're not sure if you can continue to scrape together enough money for your mortgage and are worried about home mortgage foreclosure. However, no matter how difficult your circumstances, homeowners have options that will help avoid foreclosure. Before you attempt the options outlined below, first talk to your bank about a loan modification refinancing your home mortgage as that may give you the breathing room you need to get back on your feet and stop mortgage foreclosure.

Instructions

1. Request a forbearance from the bank to stop home mortgage foreclosure. Forbearances usually last for three to six months, which gives homeowners time to pursue refinancing of their home mortgage

2. Negotiate a short sale with your bank. With a short sale, homeowners must be prepared to walk away from their home mortgage and leave their homes, so this should not be undertaken lightly. However, if refinancing or forbearance is not an option, a short sale can stop home mortgage foreclosure.

3. Hand over the deed in lieu of foreclosure. In this scenario, homeowners turn over the keys and the deed to their homes and walk away. Deed in lieu of foreclosure should only be undertaken after refinancing and forbearance options to stop home mortgage foreclosure have been exhausted. There have been problems recently with banks refusing to accept deeds in lieu of foreclosure, leaving homeowners hanging, both financially and legally, so consult with an attorney before doing a deed in lieu of foreclosure.

4. File Chapter 13 bankruptcy. This is another option that should only be considered after ruling out all refinancing and forbearance options to stop home mortgage foreclosure. Chapter 13 bankruptcy protects a homeowner's home, but should not be done without the representation of an experienced bankruptcy attorney.

Tips & Warnings

• Expect credit scores to drop by 100 to 200 points for any of the options above, however credit is usually restored within 2 years.

• Walking away from a home mortgage typically precludes buying another home for a period of 5 years.

• Walking away from a home to stop mortgage foreclosure does not mean homeowners must immediately vacate their homes. Depending on state law, homeowners may have a month up to a year and a half to move out. Consult with an attorney on what the time line is for your state.

• Be on the lookout for scams and research any company or person thoroughly before giving them any of your money.

• This article is meant to be a research starting point for homeowners, please consult with an attorney or home mortgage refinancing experts to fully understand all options and their ramifications.

Resources

• Forbes Magazine On How To Stop Foreclosure
• NOLO Information On How To Stop Foreclosure