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AVOIDING FORECLOSURE
Falling behind on mortgage payments can occur as a result of job loss, family death, or some sort of other type of life-changing crisis. If you fail to make payments for credit cards bills, not only will you be faced with delinquency rates,  your credit rating will be affected. However, when you do not make payments for your home mortgage loan, your house can go into foreclosure. Meaning, the lender takes ownership of your property.

 

Experiencing foreclosure can greatly hurt your chances for getting approved for any sort of credit or loan in the future.

What should I do if I receive a foreclosure letter?
Definitely do not ignore the letter. Contact your lenders and explain your situation and why you are late on payments. You will likely have to provide the lender with your financial information, i.e. monthly income and expenses. They will need this information in order to help you.

Are there any alternatives to foreclosure?
There are several.

Special Forbearance - This is when your lender will offer you a temporary reduced repayment plan. Or they may even allow you stop making payment for some time. 

Mortgage Modification - Your lender will allow you refinance your mortgage and combine the debt into your loan. You can also extend the term of your home loan. This will create lower, more affordable payments that will help you 'catch up'. Learn more about the refinancing for consolidating debt programs Star Loan Services offers.

Pre-foreclosure sale - You can avoid foreclosure by selling your home, usually for an amount that is less than what you are required to pay. In order to qualify for a pre-foreclosure sale, your loan must be 2 months delinquent and you must be able to sell your home within 3 - 5 months.

Deed-in-lieu of foreclosure - This option allows you to 'give' your home to the lender. You still lose your home, however, this option does not hurt your credit as bad. You can qualify for a deed-in-lieu of foreclosure if you are already in default and can not qualify for any of the other alternatives listed above. Qualification is also achieved if your attempts at selling your home before foreclosure were ineffective.

How do I know if I qualify for any of these foreclosure alternatives?
Contact your lender. They will help you determine what your best course of action should be.

 

Are there any 'avoiding foreclosure' scams?
If a solution is presented to you that is too good to be true, it most likely is.  One of the most common types of scams is called 'equity skimming'. This is when you are approached by someone looking to help you out of your financial mess by offering to pay your mortgage or provide you with cash once the property is sold. They will then suggest that you move out and transfer the deed to their name. Ultimately, they do not pay the mortgage and the home goes into foreclosure. The bottom line is, signing over the deed to someone else does not eliminate your responsibilities of your loan!

How can I avoid becoming a victim of a foreclosure scam?
There are several things you can do to help yourself.
  -- Never sign anything that you do not 100% understand?
  -- Get ever promise, or guarantee in writing.
  -- Make sure that any contract of sale of loan assumption specifically states that your released from your responsibilities of the home mortgage debt.
  -- Run any potential deal involving your property by your lawyer and your lender to make sure that it is legitimate.
  -- Contact your local District Attorney, State Real Estate Commission and/or your state's Attorney General to ensure that there are no complaints issued against the buyer of your property.

In conclusion....
Never take your time resolving foreclosure issues! Delaying will likely result in you losing your home and destroying your credit!

Related Reading:
Fair Market Value
Buyer's vs. Seller's Market?
Credit Reports and Your Mortgage
Cosigning Mortgages
Buying vs. Renting



        

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