Ways to Stop a Foreclosure

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To stop a foreclosure, talk with the lender early in the process, try to modify the home loan, consider selling the house, and see if the lender will accept a short sale. Seek out professional advice to avoid a home foreclosure with advice from a certified public accountant and personal financial planner in this free video on foreclosure.

Part of the Video Series: Tax Law, Real Estate & Credit Tips
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Video Transcript

Hi I'm Miranda Chook, a CPA. Ways to stop a foreclosure would start with talking with your lender. Even if you haven't missed payments but you think that might be imminent, you have a lot more options with your lender if you talk to them early on in the process. And if you are in the point where you're receiving late payment notices or a foreclosure perhaps has started, talk to them, don't ignore those notices. Now again, earlier on in the process you have more options, I mean the bank is the business of loaning money, not of owning property by foreclosing on you. So some of the things they might be able to do is work with you to modify your loan either on a temporary basis or a permanent basis. Now if you find that perhaps it's a little bit later in the process and your lender's not willing to work with you in that way, you may have to consider selling the home yourself to keep a bankruptcy or foreclosure off of your credit report. If you do that, you still need to talk to your lender and negotiate with them because if the sale of your house actually is still less than the amount of your mortgage, you may still be liable for that deficiency and you need to understand that. You also need to understand if a lender will even accept a short sale and a short sale is if the sales price of your house is less than your mortgage and that may occur these days in times when the value of your home has decreased. There's also something called deed and lieu of foreclosure where you as a homeowner are basically giving the property to the lender, again in lieu of a foreclosure of the actual foreclosure proceedings, but similarly you still need to understand what you're liable for because even though the lender may be selling the house, there still may be a deficiency between the sales proceeds and the mortgage and again you need to understand what your liability is for any deficiency that might occur with that. If you find yourself in this situation, again start with your lender, that will be your least painful way to go. If you find that you need more professional advice, seek out someone that you can trust. A financial adviser or an attorney who is experienced specifically in these types of transactions.


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