Stopping the Foreclosure Process
- If you know you will be experiencing financial hardships and falling behind on mortgage payments, it is best to call your lender before you miss any payments. Lenders have more options to help you if you don't avoid the issue. If you are lucky, you may qualify for a loan modification or be able to negotiate a repayment plan. However, once the bank is forced to file a Notice of Default with the County Clerk stating you are at least 90 days behind on payments, they will usually allow the foreclosure system to take its course.
- The fastest way to stop the foreclosure process is to make up the payments and get current. Of course this is a simple solution, but rarely accomplished since most people would have paid the bill if they had the money. If you don't have the money this option is moot.
- When you have no other options, you may have to sell. This will at least recover the majority if not all of the debt owed, and prevent you from being forced out under much more aggressive tactics by the lender. If you can sell it outright for a profit, do so and take the profit to start over. If the market won't warrant a profit because you owe more than the house is worth, you can have your Realtor assist you with negotiating a short sale. Lenders must agree to the short-sale terms. You will still need to leave, but with less damage to your credit and you will have prevented the publicity of foreclosure.
- If none of these options work, then you may have to sign a Deed-in-Lieu of Foreclosure, which gives the property back to the bank in forgiveness of the mortgage. Foreclosure stops, you walk away and the bank assumes the property. Obtain a Deed-in-Lieu form (see "Additional Resources," below) that will be submitted to the lender for acceptance or negotiation, or start the process with a letter that states your desire to enter negotiations and discuss it with your banker.
