How Do I Stop My House From Forclosure?

Save a home from foreclosure with special loan programs.

Homeowners struggling with unemployment or serious medical issues may get behind on mortgage payments. A lender may decide to foreclose on the home, and then auction it off to recover its investment in the property. Homeowners facing foreclosure have several options for salvaging a loan. Special programs such as loan modification, forbearance and catch-up plans allow borrowers to get the loan out of default status.

Instructions

1. Apply for loan modification. Financial institutions offer loan modification programs to assist homeowners struggling with large financial debts. According to CNN Money, homeowners may qualify if total debt obligations are more than 55 percent of the total family income. If approved for the program, borrowers can expect mortgage payments to be lowered to 31 percent of monthly income.

2. Apply to forbearance programs. Lenders also offer forbearance programs to aid families facing foreclosure. These programs are usually reserved for people struggling with job loss or serious medical illness. If approved, the borrower can stop making payments for a specific period of time. Contact the lender to apply for loan forbearance.

3. Negotiate a catch-up plan with the lender. Some lenders are open to creating payment arrangements to catch up on missed payments. This allows consumers in default status to bring the account current and avoid foreclosure proceedings.

4. Ask about special programs backed by Fannie Mae. Contact the lender and ask if the loan is backed by Fannie Mae. This organization offers a special program for families facing foreclosure called the Home Saver Advance Program. Qualify by providing proof of financial hardship, such as unemployment or medical issues. Borrowers approved for the program will get access to a personal loan to catch up on missed payments. This will move the borrower out of default status on the mortgage.

Tips & Warnings

• Borrowers who can’t afford a home any longer should talk with the lender about pre-foreclosure sales. With these sales, the lender agrees to accept a payoff amount less than the loan amount. A pre-foreclosure sale is ideal for homeowners who owe more than the home’s market value.

• Don’t forget to read loan modification terms closely. Loan modifications are good for a specific time period. For example, a lender may approve a modification for 30 months. After the modification period has expired, payments will revert to the pre-modification amount.

References

• CNN Money: Mortgage Help: Do You Qualify
• Fannie Mae: Avoid Foreclosure