How to Settle With the Bank to Avoid Foreclosure
The reality of foreclosure is a frightening prospect, especially if you can't seem to find a way out of the problem. But don't lose hope because there are ways to settle with the bank to avoid foreclosure, such as loan modification, short sale, or deed-in-lieu. In order to settle on one of these options, you'll need to follow a few steps that involve your mortgage company and your own decision-making.
Other People Are Reading
Instructions
-
Initial Contact
-
1
Contact your mortgage company. Without your contact, the mortgage company will not know what's going on. Simply explain the situation and let your representative know that you are looking for options.
-
2
Find out what programs your mortgage company offers. You'll probably get some information on foreclosure avoidance programs from your mortgage company when you contact them. If the representative does not offer assistance, ask specifically to talk to someone who can help you avoid foreclosure.
-
-
3
Research the available choices. Typical options are modifications, short sales, and deeds-in-lieu. A loan modification is a change in terms on your mortgage note, such as interest rate or the length of the loan. A short sale will allow you to sell your home, even if it is worth less than you owe, in order to pay off the mortgage. A deed-in-lieu occurs when the bank takes back your house and effectively cancels the mortgage, even if the value is less than you owe.
-
4
Write a hardship letter requesting a program. You've spoken to the bank representative in person, but it's also a good idea to write a hardship letter that explains the situation, why you're behind, and that you are willing to work with the mortgage company to come up with a solution.
-
5
Complete the required paperwork. Your mortgage company will probably request documentation, such as bank statements and pay stubs, as well as a financial worksheet. Complete this accurately and do not hide any information.
Maintaining Contact and Acceptance of Offers
-
6
Stay in contact with your mortgage company until a resolution is reached. Don't wait for the mortgage company to contact you. Set up a schedule and call your representative regularly.
-
7
Be prepared to accept an alternative. You may not get the exact solution you've requested, but remember that the goal is to work with the mortgage company to avoid foreclosure.
-
8
Investigate any option you're given thoroughly. Don't be afraid to ask questions and do research on your own.
-
1
Tips & Warnings
Be patient. The approval process for foreclosure avoidance can take weeks, even months, to complete.
Be willing to accept the fact that your solution may require you to leave your house, such as a short sale or deed-in-lieu. This is a hard situation to accept, but you will be able to avoid a foreclosure proceeding if one of these options is approved.
