Can Foreclosure Be Stopped Once the Bank Initiated It?
Hiding from foreclosure notices won't make them go away. According to the United Way, a recent survey by Freddie Mac and Roper Public Affairs and Media found that 75 percent of delinquent borrowers were contacted by their lenders but never responded. Ignoring your lender only worsens the process. Opening the door to communication with your lender can help you learn acceptable foreclosure alternatives.
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Hardship Letter
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Respond to your lender's threats with a hardship letter. A hardship letter details the events that led to your current delinquency and helps the lender determine available solutions. The dates for these events should coincide with the delinquency on your loan. A good letter is brief, but descriptive. Vague statements do not help the lender determine what available programs match your needs. Instead, give details on when your income, if at all, will be regained or how lower payments fit into your budget. Copies of household bills and income statements should be enclosed with your letter.
Advocacy Groups
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Advocacy groups can help you stop the foreclosure process once it has been initiated. For example, the Neighborhood Assistance Corporation of America (NACA) has a Home Save program available to homeowners at all stages of the foreclosure process. The Home Save program requires that homeowners provide a hardship letter and copies of income and expense statements before negotiations with your lender can begin. Popular foreclosure solutions through the NACA program are refinance and loan modification.
NACA counselors negotiate on your behalf to obtain mortgage terms that are reasonable for your current monthly budget. Changes made to your mortgage through NACA, however, are permanent.
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Forbearance
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If your hardship is temporary, contact your lender immediately to determine forbearance options. Forbearance occurs when your payments are temporarily suspended or reduced. If your payments are unaffordable, forbearance is not an appropriate option for you. Forbearance works best for homeowners experiencing a short term loss in income such as through unpaid disability leave from work. When you begin making payments again on your loan, you are required to make up for the payments missed during the forbearance period.
Considerations
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You can reverse the foreclosure process once it is initiated by communicating with your lender or getting an advocacy group to communicate on your behalf. However, it is important to respond promptly to lender communications. "The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house," explains the U.S. Department of Housing and Urban Development. Don't rely exclusively on one relief option. Contact a HUD-certified counselor to determine all local foreclosure assistance programs that match your background and financial need.
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