With the recent Q3 reports showing that foreclosure rates have steadily increased over the last year, I thought it might be a good time to review ways to avoid foreclosure in the first place. This is by no means the definitive list but this goes a little bit more into detail than my early post last month, which by the way you can read by clicking on the link below for related posts.
How to avoid foreclosure in eight steps:
1. Pay the full amount that is in arrears if possible.
The lender may require certified funds to reinstate the loan. Keep current on your mortgage payments, which credit counselors say should take priority over credit card debts and other debts.
2. Contact the lender as soon as possible.
If you are experiencing financial problems. The lender is more apt to work with you the sooner it is contracted. Explain to the lender why you are late. studies show that homeowners who are one or two payments behind are more likely to keep their homes than those who are one or two payments behind. Ask the lender for a temporary or permanent change in the mortgage terms, often called a “workout”.
3. “Workout” options include re-amortization.
Or repaying part of the delinquency each month along with your regular monthly payments: a temporary or permanent interest rate reduction; deferring missed payments to the end of the loan; extending the loan period; and reducing the principle balance.
4. Contact state and local government agencies.
As well as private charitable groups that have programs to assist with all or part of your mortgage payments for a fixed amount of time. You may also contact an attorney through a neighborhood legal services office or bar association offering pro-bono services. Some loans guaranteed by federal or state agencies may be required to provide certain assistance and options to homeowners to avoid foreclosure.
5. Refinance the home debt.
If you have equity built up. However, beware of refinancing schemes that may be more costly than your existing mortgage.
6. Consider selling the home before foreclosure.
Which is a better option than having a bank sell if for you. Get an appraisal to determine the homes value and marketability. Call your local or State Department of financial services. Florida residents can call a consumer helpline toll free 1-800-342-2762 before you pay anyone who offers to help you get out of foreclosure. If more is owed on the home than-it’s value, the mortgage company may agree to sell the home at a price that is less than the amount owed. If the lender doesn’t agree, the property can still be sold prior to foreclosure but the borrower would woe the remaining amount of the loan to the lender.
7. Consider filing for bankruptcy.
This can stop the foreclosure and give you time to work out a plan to keep your home. Seek legal assistance from a qualified bankruptcy attorney. You will need to have sufficient income to work out a plan to repay your debts.
8. Consider handling over the deed to the lender.
In lieu of foreclosure. This is a good idea id the lender agrees not to make further collection efforts against the borrower but the borrower may also forfeit any tights to equity in the home.
“Although not all areas are being hit as hard as others, the rise in foreclosures is quite widespread, with 45 out of the 50 states documenting year-over-year increases in the third quarter,” he said. “Given the number of loans due to reset through the middle of 2008 and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets.”
Nevada led the nation in the third quarter with 16,817 foreclosure filings on 12,982 properties, representing one foreclosure filing for every 61 households. California was the leader overall with more than 148,000 foreclosure filings on 94,772 properties, but was ranked second since its numbers represent one foreclosure filing for every 88 households.
Other states in the top 10 included Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas. Vermont had the best foreclosure record with just 25 filings, representing one filing for every 12,294 households. South Dakota was second best, with one filing for every 4,639 homes while North Dakota listed one filing for every 4,288 households.