Getting the news that your home is possibly going to be foreclosed soon is very devastating, but it's not the end of the world. You can avoid this and even be successful at defeating foreclosure. If you were planning to face foreclosure and beat it, you must understand its consequences and be aware of how the entire process works. Yes, it is possible for you to fight a foreclosure. Facing the problem and taking a stand so that you can hold on to your home will give you more valuable time, and you can then use this to consider other options.
1Talk To Your Lender
Your lender isn't your enemy; he isn't out to repossess your property, particularly during a time when the real estate market is down. Understand that if your lender fails to get a hold of you through various communication methods, like email, regular mail, or phone, he will likely assume that you are not planning to pay him back. This triggers the process of foreclosure. It is always better to give your lender a call and explain to him your financial problem that may be hindering you from making payments, because he may even have a solution to the problem.
For example, there have been several situations wherein lenders help out borrowers by giving them more time to meet their financial obligations, especially once they learn that their borrowers have just been laid off. Or, they may offer an advance as a way of helping those who have new jobs where their salaries are lower. So, talk to your lender because you won't know what he can do for you if you don't discuss your issue with him.
2Challenge The Foreclosure
During the entire process, you have the right to challenge the foreclosure, whether you have the standard mortgage or the title deed. Lenders do make mistakes when filing related documents, and you can use this knowledge to your advantage. Going this route may not guarantee success, but this will give you precious time so that you can get your money problems in order or perhaps find a new place to move into.
Remember that you need a lawyer in case you do plan on challenging your lender. Your attorney will be responsible for meticulously examining the original loan documents for inaccuracies. In case errors are found, it's possible for the document to be found unenforceable, and the lender may even be obligated to pay you instead, especially if you're able to prove that you suffered financial difficulties because of it.
3Sign Over Your Deed To Your Lender
Most lenders prefer to avoid processing a foreclosure as it is time-consuming and costly too. In case you find yourself in a financial situation that makes it impossible for you to get enough money to pay what you owe, you can think about offering up the deed so that you'll avoid the detrimental effects of a foreclosure on your credit. When you sign over your deed to your lender, you're saving him time and money, and the action is also recorded. Your lender will thank you for this because, through this, you spare him from going through the foreclosure process, you protect him from lost interest, and others. But, you must understand that this is a difficult decision to make since you will also be giving up the entire equity of your home.
4Know The Process Of Giving Up The Deed
Once you have carefully weighed your options and discovered that offering your deed is the more prudent way out of your financial problem, the process begins. Call your lender to explain to him your current circumstance, and tell him about the attempts that you've made to put things on the right track again (even though these may be failed attempts). It's vital to convince and demonstrate to your lender that you currently do not have a way to meet your financial obligations to him.
Once your lender accepts your deed in place of foreclosure, the deed is then prepared, which is usually done by a title insurance company. Mail this document to the lender and verify that you've signed it and registered it already. After that's taken care of, you will have to leave the premises.
5What Do You Get In Giving Up Your Deed?
It may be hard to say goodbye to a place that you've called home for some time, but one huge advantage of giving up your deed instead of going through a foreclosure is that you can still honestly claim that you've never experienced a foreclosure the next time that you apply for a mortgage. This gives you a higher chance of getting an approval, especially since you were able to protect your credit from the devastating impact of a foreclosure. But, there are also some mortgage lenders who inquire if you've also given up a deed to avoid foreclosure. If you don't tell them the truth, you could be sued for fraud once they learn about it.
Yes, it is scary and daunting to face foreclosure, and this will badly damage your credit rating, as well. Nevertheless, there are certain ways to avoid a foreclosure or even defeat it. Take note that the simplest way to deal with this financial problem is to avoid it. Also, you need to communicate with your lender and update him whenever there are changes in your situation that may impact your finances. If you avoid the issue, you could end up having more problems.
Jackie Wing is an Alaska native, who enjoys snowboarding more than is probably socially acceptable. She lives in Anchorage with her two dogs Reese and Peanut, or as she likes to call them "Thing 1" and "Thing 2."