Stop Home Foreclosure

If you are facing foreclosure, you are one of thousands of people who are losing their homes. Unfortunately, thousands more will be in the same situation before the economy improves.

The Foreclosure Problem

The foreclosure epidemic began with subprime mortgage lending which created what we call the mortgage melt-down. No one anticipated this; the mortgage industry is not entirely to blame. The adjustable rate mortgages (ARMs) and other financing »”>creative financing methods were great deals for many people who could benefit from these programs. Many borrowers were able to get 100% financing at a very low rate, fixed for 3 years. Of course, they were aware that the rate could increase significantly when the time came for the ARM to reset, but they werent worried; they planned to refinance and get out of the ARM before that happened.

Unfortunately, the economy took a devastating downturn. With unemployment on the rise, many people lost their jobs and defaulted on their mortgage; therefore, they were unable to qualify to refinance their home. Now, they are stuck with a mortgage payment that they cannot afford. In addition, real estate market values declined sharply, making homes unable to appraise for anything near the amount owed on the mortgage; therefore, another roadblock to refinancing.

The Foreclosure Crisis

The foreclosure crisis continues with many people just walking away from their homes. Lenders are hit with financial loss and mortgage guidelines are tougher. Even people with very good credit are unable to refinance their homes to get a new mortgage with a fixed interest rate.

Bad things happen to good people! Foreclosure hurts, no matter what the cause. People facing foreclosure are devastated; many feel helpless, hopeless and depressed. They wonder who to turn to as they receive countless phone calls and letters from their mortgage company, demanding payment.

To make matters even worse, distressed homeowners are flooded with mail from companies who promise to help with guarantees to save their home or stop the foreclosure process. There are reputable foreclosure consultants who offer solutions, but most of the companies who approach people that are in default on their mortgages are offering a scam. They charge outrageous fees and perform little or no service. These predators can get your name from the legal news or a foreclosure list that they have subscribed to.

Foreclosure Options

Now that I have explained how we got into the foreclosure crisis, I will cover some of the options available to you. One is to just walk away. Though many people are doing this, it should be your last resort. A foreclosure is very damaging to your credit report and it is one of the items that take the longest time to be removed from your credit history. There are cases where this is your only option, but there are others to consider as well.

Some people are able to negotiate a mortgage modification plan with their lender to make their mortgage more affordable. The lender/servicer may agree to reduce the interest rate or extend the mortgage term. In some cases, lenders have been known to stop the foreclosure process and write off late fees, accrued interest, escrow shortages and even some of the principal. They might allow the borrower to start over with a whole new mortgage. Years ago, this was not common; however, things have changed drastically and so have lending practices.

Another solution is to list your home and see what kind of offers you get. Chances are you will not be able to sell the home for what you owe on the mortgage because market values have declined sharply. In this case, you need to negotiate with your lender to convince him/her to accept a short sale. A short sale is a transaction where the lender is willing to accept less than what is owed now rather than foreclose on the home, incur legal expenses, wait out the redemption period, evict the homeowner, secure the home, list the home, etcAll of this takes time and effort; meanwhile, values continue to decline and the mortgage holder takes a greater loss.

Homeowners can discuss these solutions with their mortgage company, but many are too upset and they just dont know what to say. Just getting through the system to reach the person you need to speak to is an ordeal and the negotiation process is difficult as well. There are honest consultants who specialize in this type of service for a reasonable fee.