Foreclosure is the result of not being able to keep up with mortgage payments you contracted for when you purchased, or refinanced your home. Check out the following topics to know if it is possible to stop foreclosure through DIY efforts:
- Foreclosure - A stressful experience for a homeowner
- DIY foreclosure - Fight when it makes sense to stay in your home
- DIY foreclosure - Use tools to protect your home
- Can you stop foreclosure through DIY efforts?
Foreclosure - A stressful experience for a homeowner
Foreclosure is a stressful and emotional experience for anyone to go through. Being forced to consider leaving the neighborhood or community you chose to live in; the house you thought you were making an investment in; having to consider your children attending a different school - can feel overwhelming.
If you are facing the possibility that your home and mortgage will be foreclosed - you have some options. If you are serious about keeping your home you will need to dig in and get ready to commit yourself to achieving your goal.
DIY foreclosure - Fight when it makes financial sense to stay in your home
There are many instances where letting a home go back to the bank makes better sense for your personal finances than trying to come up with a plan to keep it. For instance; your home value dropped well below the current market value. This is called being underwater. If only marginally underwater, giving some consideration to working out a plan to keep the house makes sense if you can afford to. If the home has lost so much value that you could not possibly have equity again in the next 5 to 10 years (or ever), it may be time to be honest with yourself. The house could be an anchor weighing you down for many years.
If it does not make sense to keep the home, or you cannot afford to keep the home, you can consider the following options:
Deed-in-lieu: A deed in lieu is simply handing the home over to the bank. Contact your loan servicer and suggest this is the route you are considering. They may want to connect you with a loss mitigation specialist inside the bank who may try to find a way to keep you in the home. They may suggest you contact a HUD housing counselor for help in determining how you can stay in the home. It's fine if you take the time to explore these options, but remember why you are considering the deed in lieu - you are underwater to a degree you may never gain equity, or your finances have been effected in the current economic downturn to the point you cannot afford the home no matter what.
Short sale: Consider finding a buyer and completing a short sale. Different areas of the country are having different experiences with short sales. Consider talking to a local realtor or other professional (mortgage broker, real estate attorney) and find out what they are experiencing with short sales. Depending on where you live you may hear short sales are taking 3 to 6 months to go through once you have an interested buyer. Some may hear they take longer.
DIY foreclosure - Use tools to stop it
What if you have already received the notice of default on your mortgage and are considered to be in the foreclosure pipeline right now? If it makes sense for you to fight to keep your home, there are tools and resources available.
The loss mitigation department at the loan servicing company you are dealing with (who you send your mortgage payment to) can provide you with a loan modification package that you can complete and send in. You may have a loan that qualifies for one of the federal programs designed to keep people in their homes through mortgage modification. Programs such as HAMP, HARP 2, and funds from the nationwide state attorney general foreclosure /robo signing settlement may be available to you if your loan is with: Bank of America, Chase, Citi, Wells Fargo, or GMAC/Ally Financial. These programs have qualifications that you and your loan must meet in order to be considered for them.
You need to be ready to show more documentation and meet deeper scrutiny than you likely did when you first took out the mortgage, refinanced, or took out a HELOC or second mortgage. You need to be diligent. Banks have mysteriously lost paperwork sent to them half a dozen times; have run dual track foreclosure while loans are in the modification processes (which should stop with the 5 banks listed above as part of the National attorney general settlement); and a whole host of other "sandbagging" efforts designed to increase revenue from the mortgage loan serving as opposed to sincere efforts to help people avoid foreclosure and keep their home.
Can you stop foreclosure through DIY efforts?
Yes. It will require a huge time commitment, patience and perseverance. There are tips and preparations that can smooth some of the experience. There are resources to tap into along the way.
Join the Debt Consolidation Care Community and participate in the foreclosure forum. If at any time you find you are overwhelmed or simply want to work with a professional - work with an attorney with foreclosure experience.