Over the years lenders have been offering outrages loans to people who can’t afford them. Many lenders have gone as far as committing fraud by placing higher values on homes than what they are worth. This inflates the amount of the loan needed by the homeowner so the lenders can boost their own profits. The interest rates on adjustable rate mortgages have risen so high that it makes it impossible for many homeowners to afford their inflated mortgage payments. Below I have outlined some steps you can take to stop a foreclosure on your home. In order to accomplish this you must act swift and without any procrastination.
If you haven’t missed a payment but know you are going to, contact the lender right away to let them know your situation. If you wait until you miss a payment, it will just take longer to resolve the problem.
Ask your lender for forbearance. This will allow you to delay payments for a short period of time; with the understanding that another option will be used to get your loan payments back on track again.
Ask for a repayment plan where your missed payment will be added to your current payments. This solution is for a short term financial problem where you missed one or two payments.
If you have already missed 2 or 3 payments and own money in legal fees, the lender may still offer you a repayment plan but you will most likely have to pay a percentage upfront; with the remaining balance to be paid off in a year or two.
You may able to obtain a loan modification plan if you can’t afford the repayment plan. In this case the lender will adjust the terms of the loan to make it more affordable.
Some lenders may offer you a short refinance, where the lender agrees to forgive some of your debit and refinance the remainder into a new loan.
If none of the above methods work, you may want to file for chapter 13 to temporary hold off the foreclosure process and force the lender to offer you a more practical payment plan.
Your last resort would be to deed back your property to the lender in exchange for all obligations under the mortgage. This will however damage your credit and you may be subject to pay tax on the forgiveness portion of the loan even though you received no money.