Alternatives to Foreclosure

If you are three month's past due on your mortgage, there is a good chance a Notice of Default will be filed against you soon. This Notice represents the lender's intention to eventually sell your house at a Trustee's Sale. By the time you receive your Notice, it is not likely that the lender will accept partial payments.

It is important to recognize the emotional toll this will take on you and your family. I would highly recommend reaching out to counseling services that are specifically tailored to assist you with navigating your way thru the lender red tape, while at the same time helping you to cope in a healthy manner.

Counseling Services

• If you would like advice on how to locate your lender or find independent, non-profit counselors approved by the Department of Justice, click here.


• For credit counseling, foreclosure prevention services and other valuable resources.
  For on-line counseling.

Possible solutions

• Loan modification: Mortgage servicers can adjust the terms of your loan -- most often by lengthening the amortization schedule, lowering the interest rate or rolling the delinquent amount into the loan and re amortizing the new balance -- to help you bring the loan current.
• Short sale: The lender allows you to sell the house for less than the outstanding loan amount, takes the proceeds and forgives any remaining debt.
• Refinance with a "hard money" loan: You won't like the high rates and fees of a hard money loan -- one from a private lender -- but it may buy you time to sell your home and avoid foreclosure
• Forbearance: If you suffer a short-term financial setback (expensive car repairs, a medical emergency), your lender may provide some breathing room by agreeing to let you pay off your missed payment in two installments over the next two months.
  
  

We are currently facing the highest foreclosure rate in history. Lenders do not want your house back, ESPECIALLY if you owe more than it is worth. Check your home's value.

It is ethical and responsible to make every effort to save your home. However, in a lot of cases, it also turns out to be nearly impossible to do so. If it turns out that the bank does sell your home at a Trustee's Sale, do not lose heart. You are not alone, this has happened to a lot of people, myself included. It was upsetting for a time but eventually I realized it was a house and not a kidney. The biggest loss was that now my credit is shot. No problem, credit can be rebuilt. There are credit card companies standing in line to help me rebuild my credit. Furthermore, lenders are going to have to think up new loan programs just for people who have lost their house to a foreclosure sale. And you bet they will think of new loan programs. If they ban us from getting a home loan, they will be effectively shooting themselves in the foot. Bottom line is they want to make money and quite frankly they really don't discriminate on who pays it to them!

If you have your own story, feel free to leave it here, under comments. Together, we can all Keep it in Perspective.