Losing a home in foreclosure damages the homeowner’s charge and could lead to tax obligations with the IRS. Foreclosure is the legal method utilized by lenders to take back a home due to missed payments on a mortgage. The creditor can openly auction the home to recoup some of the reduction on the mortgage, however, the homeowner can still be responsible for the gap between the mortgage amount at the time of foreclosure and exactly what the home eventually is sold due to the lender.
Pay the arrears and all charges in full. Lenders generally will not accept partial payments once the foreclosure process has begun. Call your lender to get the total sum due to stop the foreclosure and ask what payment methods are acceptable. Some lenders require a money order or cashier’s check be used to repay arrears.
If you can’t pay in full, contact your lender. Some lenders have forbearance applications that enable you to temporarily halt obligations and stop the foreclosure. Other lenders will make payment arrangements with you to make up the missed payments, but the creditor can ask for a partial payment for this particular arrangement. Ask the lender representative about all options and request all forms be sent to your property.
Ask the lender for a loan modification. The creditor may modify the conditions of your loan to make the payments more affordable by lowering your interest rate or calculating the duration of the loan. The owed payments could be added into the new payment program, so you cover the rear equilibrium over time.
Obtain the permission for a sale of the lender. A short sale is when you sell the home for less than what is owed on your mortgage, enabling you to prevent a foreclosure. The lender will cancel the remaining mortgage debt once the home is sold. You’ll need to enlist the assistance of a realtor and attorney to perform a short sale, and you will need to find a buyer.
Contact the creditor about a deed-in-lieu of foreclosure. You will transfer back the home to the creditor with this type of deed, a legal document used to demonstrate ownership of a home. The lender will forgive the sum due under your mortgage and cease foreclosure proceedings. Some lenders require you try a short sale before a deed-in-lieu of foreclosure.
Document Chapter 13 bankruptcy in federal court. The Chapter 13 bankruptcy petition is for personal reorganization and carries a repayment strategy for all your creditors, including your mortgage lender. The bankruptcy will automatically halt the foreclosure proceeding. Your repayment program will keep your home from foreclosure once confirmed by the court, should you make the payments due under the plan in full and on time to get your plan’s duration.