How to Stop a Property Auction

Homeowners have options to stop home auctions

Homeowners facing foreclosure undergo a dramatic roller-coaster as the auction date for the property gets ever closer. The foreclosure auction is the proverbial nail in the coffin when it comes to the bank taking ownership of a property and officially foreclosing. The good news is that homeowners have several options to employ when it comes to stopping the gavel before it falls. Some options mean staying in a home, other options result in selling, but avoiding foreclosure is possible.

Instructions

1. Contact your lender. Many times, homeowners make the mistake of not contacting a lender out of embarrassment or anxiety when foreclosure proceedings begin. It is noteworthy to point out that the kickoff for proceedings begin once you become 30 days late, so timing is crucial. Your lender employs skilled specialists trained in drafting a loan modification or a short sale, based on your hardship needs and the type of loan you have on your home. If the lender isn't willing to negotiate to stop the auction, there are other things to consider.

2. Locate a counselor from the Department of Housing and Urban Development (HUD). These counselors are a free resource to homeowners and work as a mediator between homeowner and lender to devise a solution not involving foreclosure. Once the HUD counselor makes a recommendation, the homeowner needs to act on it promptly. It could be a loan modification, allowing you to stay in your home or a recommendation for short sale or deed in lieu of foreclosure, if factors are more long-term and gloomy in nature. If the HUD counselor still has no success in negotiating with the lender, the fight isn't over yet.

3. Declare Chapter 7 bankruptcy. There are options to declare insolvency with or without the assistance of an attorney. Based on your own bankruptcy expertise and financial resources, you will need to make that decision. When the property is your homestead (meaning that you live in the property), you are able to include the property in the bankruptcy. This puts a temporary stay on the home auction and provides you with the lead time to save up and pay delinquent payments and fees to the bank. Once all past-due amounts and court costs are settled, you will stay in your home and avoid the auction completely.

Tips & Warnings

• At any time before the auction commences, if you are able to pay the lender past-due mortgage amounts and fees, the foreclosure is automatically stopped, regardless of whether or not they were willing to negotiate.

• Declaring bankruptcy is a last-resort option, as it will damage your credit for seven consecutive years following the bankruptcy. However, if a lender isn't willing to work with you in coming up with another solution, this is a powerful last-ditch way to avoid foreclosure.

References

• Bankruptcy Alternatives: How to Stop a Home Foreclosure Auction