How to Stop a Foreclosure - Options to Help You Avoid Foreclosure on Your Home

You might have fallen behind in your mortgage payments due to unforeseen circumstances such as illness, job loss, or divorce. But even if you understand how to stop a foreclosure on your home, you do not need to panic. If you are not at fault, your mortgage company probably wants to work out a solution with you and not start foreclosure proceedings. Therefore, it is important to be polite and avoid aggressive actions to force your way out of the home. Although your situation does not appear quite severe, it is better to deal with this issue early on to avoid it growing into a larger issue that may prove more costly.

If you think that you qualify for a mortgage modification, then you should contact your mortgage lender immediately. They will give you an opportunity to renegotiate on your loan. But, if you decide to proceed with foreclosure, your lender may require that you apply for a mortgage refinance as well.

The government has enacted several programs to help homeowners from losing their homes to foreclosure. One popular program is the Home Affordable Foreclosure Program, which provides eligible homeowners with mortgage refinancing that can stop the foreclosure process and keep them in their homes. Many homeowners are approved for HAMP, but many others are turned down. This could be because they failed to qualify for the program or the lender thought that their current mortgage payment and loan terms were acceptable. Some homeowners have actually taken out more than one loan through HAMP, causing the total amount owed much higher than they should have under the guidelines.

If you qualify for HAMP, another option is to use mortgage brokers to negotiate with your lender. Mortgage brokers work for both you and your lender so they can try to secure a better deal for you. In many cases they are successful and you can stop the foreclosure process. Mortgage brokers normally work directly with lenders. So, when you approach them to try to save your home, you are actually approaching your lender for a mortgage refinancing.

However, it is important to realize that your lender may not accept either of these options. In order for a short sale to be successful, your mortgage payments need to exceed the amount of equity you have accumulated along with the remaining amount of your loan. You also need to remember that your lender can only take back the deed of your home if you qualify for HAMP. If you are currently in foreclosure, it is not likely that you qualify for either of these options. It is important to understand that the government does not want to foreclose on your home unless there is no other alternative.

As with HAMP and short sales, lenders will only accept a deed in lieu of foreclosure when other relief options have been tried and have been ruled inadmissible. So, in most cases, these are not an option that you would attempt to pursue if you do not have another choice. Your lender will be upfront with you and tell you what your options are. Your mortgage professional may also be able to get a new lender to agree to your refinance offer. Your financial adviser may even be able to obtain a stay of foreclosure.

The next option, which should never be overlooked, is filing for bankruptcy. If you are facing foreclosure but think that you can avoid it with bankruptcy, then you are wrong. Bankruptcy should be viewed as a last resort for homeowners in desperate situations. When considering whether or not to file for bankruptcy, you should realize that you will lose any remaining assets that you have through your mortgage, along with any tax benefits that you may have experienced with your tax returns. It is important to understand that a bankruptcy may prevent you from obtaining any type of refinancing or lending for a minimum of 10 years, so you need to weigh the consequences carefully.

The final, and possibly most appealing, the option is the loan modification. Loan modification, while providing you with the opportunity to renegotiate your monthly mortgage payments, can also prevent the possibility of a complete foreclosure by negotiating with your lender. Many homeowners who have applied for loan modification have received offers of more affordable payments from their lender. If you are facing foreclosure and struggling to keep your home, a loan modification could be a lifesaver. However, before your lender even gives you this opportunity, they will want to see proof that you are going to be a good candidate. If you have other options available such as bankruptcy or home equity loans, then your lender should be willing to work with you to ensure that you are able to make the new payments and to prevent the possibility of you losing your home to foreclosure.