The first step to stop foreclosure is to contact your lender or a professional company like Homeland Assistance Inc. to help you and try and obtain a reasonable loan workout or repayment plan. The quicker you get the ball rolling, the better chance you have of striking a deal with your lender, so you can save your home and your credit. Please start today by making the first call and let us help you get educated so you can have all your ducks in a row. Remember: The hardest call is the first one and it only gets easier from there.

More than 50% of foreclosures would be avoided if people got help and contacted their lender. So be proactive and aggressively pursue all options you have because you do have quite a few tools you can utilize to avoid as much loss to you, your credit and your family as you can.

There are quite a few ways that a homeowner can stop foreclosure. I thought I would list a few of them here with some brief explanations for you.

1. Loan Workout- A loan workout is when you negotiate with your lender any kind of plan that will benefit both you and the lender when you are delinquent or in default. This is a broad term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, forbearance plan etc.
    
2. Loan Modification- This is when the lender modifies your current mortgage in order to work with you and make your mortgage more affordable. In the past this was only used when a borrower was delinquent but now it is being used before someone is delinquent. This will be the best option for most homeowners that qualify and often the best way to help homeowners avoid foreclosure.
    
3. Forbearance- This is when you are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal foreclosure proceedings.
    
4. Short Sale – This is used when all negotiations for a loan workout or modification have failed and you are upside down on your mortgage meaning you owe more than it’s worth. The lender basically agrees to cooperate in the sale and take less than what is owed from the new buyers so you do not have to come in with any money to close. You place the home for sale and any offers are presented to the bank. Unlike a traditional sale when the homeowner decides what offer to take. The bank controls the negotiations and the homeowner has no say in the process. It’s an option a distressed homeowner would use to save their credit from a foreclosure filing if they are unable to qualify for a loan modification. Sometimes the distressed homeowner can negotiate with the lender for perks such as keys for cash for helping the lender get the home off their books.
    
5. Foreclosure Bail Out Loan – Is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage and it is common for interest rates to approach 10-15%. Points can be as high as 5 and terms are usually short. In the 5 year range where a balloon payment will be due for the remaining balance. In order to qualify you must have sufficient equity. Hard money lenders are looking for 65-75% max loan to value and a decent equity cushion. You also have to have ability to repay as in a traditional mortgage.
    
6. Deed-in-lieu – is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of repossession.
    
7. In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower. Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parole evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations. Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached. (Retrieved from Wikipedia)
    
8. Chapter 13 Bankruptcy – Is primarily used to stop foreclosure of your home. In order to qualify you will have to have a steady income. The bankruptcy petition would need to be filed before the sale date of your property. After filing, you will propose a plan to repay the amount you fell behind on the mortgage. You will also begin to again pay your regular mortgage payments, which under the operation of law must be accepted by your mortgage company. What many lawyers and people don’t know is that a forced loan modification can be sanctioned by the courts if it is proved that the borrower cannot afford the current payments. The concept is similar to debt consolidation, but it permits you, the consumer, to pay unsecured debt down without accruing interest (student loans are exempt) and without having to deal with those annoying calls from debt collectors. Under a typical plan, you make monthly payments to a court appointed bankruptcy trustee for generally three to five years.
    

The amount of your monthly payment is determined by several factors such as the amount of debt you have, your ability to repay and the extent that you have assets. In exchange for stopping any and all collections activity, one proposes to pay all or, in specific circumstances, a portion of the debt through a Chapter 13 plan. The filing of a Chapter 13 bankruptcy stops ALL collection activity though something called the automatic stay.

The automatic stay remains in effect during the life of the case unless the court orders otherwise. You can always refinance or sell your home while under Chapter 13 if you wish to pay off the bankruptcy and move on with your life. The Chapter 13 stops the foreclosure immediately. Often, your only other option would be to refinance, or enter into a repayment agreement with your mortgage company. All too often, they want a double payment each month until you can catch up. If you had that kind of disposable income, you probably wouldn’t be in this situation in the first place.

Homeland Assistance Inc. would like to thank you for taking the time to educate yourself on the foreclosure process and wish you and yours the very best.

Our Philanthropy

Homeland Assistance Inc. is deeply committed to making the communities in which it operates a better place. The company and management team continually support the following charities:

When your situation changes for the better we ask you to consider helping your local community through charities that make a difference in the lives of others.

This entry was posted on Monday, December 29th, 2008 at 4:10 am and is filed under Stop Foreclosure. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.