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How Do I Avoid Foreclosure?

Tips for Avoiding Foreclosure

If you're living in fear of foreclosure on your home, there are options available to help you avoid such a disastrous situation. If your problem is only temporary, there are three opportunities for relief:

  • Reinstatement
  • Forbearance
  • Repayment

If your problem is more long term or permanent, all is still not lost. Mortgage modifications and partial claims may be the solution you've been hoping for to halt the foreclosure process. Speaking with a mortgage expert at Total Mortgage about foreclosure is a great place to start.

If you're only slightly behind on payments, foreclosure may not be the end all. Most lenders will be willing to reinstate payments by accepting the principal balance in a lump sum by a determined date. Often times, the reinstatement will accompany forbearance. Forbearance allows borrowers to postpone payments for a specified period of time and the lender will typically agree to a time frame to bring the loan current. The combination of reinstatement and forbearance usually results in the borrower coming up with the past-due payments from a variety of sources, including bonuses, investments, tax refunds, etc., resulting in bypassing the foreclosure process. The third and final short-term option is a repayment plan, which essentially is an agreement between a borrower and a lender to resume regular monthly payments in addition to past due amounts until the amount owed is caught up and foreclosure is an afterthought.

Long-term or permanent difficulties in making monthly mortgage payments will require more finagling to avoid foreclosure. Mortgage modifications will require your lender to change the terms of your original loan, which will ultimately make your payments more affordable. To avoid foreclosure, the changes lenders are most likely to make include:

  • Adding the total of the missed payments to the existing loan balance
  • Lowering the interest rate
  • Changing the loan from an adjustable rate to a fixed rate
  • Adding more years to repay

Partial claims are another alternative for long-term or permanent struggles against foreclosure. If your loan is FHA or VA insured, your lender may be able to secure a one-time interest-free loan on your behalf. This will enable you to bypass the foreclosure process and bring your loan current only if:

  1. Your loan is delinquent between 4 and 12 months
  2. Full mortgage payments are able to be made again

If your lender files for a partial claim to elude foreclosure, the U.S. Department of Housing and Urban Development (HUD) will bring your mortgage current with your lender, and you must sign a promissory note. The promissory note is interest-free and acts as a lien on your property until paid in full.

If you would like to speak to a loan officer on how to avoid foreclosure, please call 877-868-2305 today to speak with one of our mortgage experts. You can also email us with your questions on foreclosures so that we can get back to you with your mortgage inquiry.

Call a Total Mortgage expert now at 877-868-2503 to find out how we can customize a mortgage loan with some of the lowest current mortgage rates for you.

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