Four Ways to Stop Foreclosure

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Four Ways to Stop Foreclosure

• Several Options to Help You Avoid Losing Your
  Home to the Bank

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Stopping Foreclosure

• Did you just receive a Notice of Default (NOD) or
  a Lis Pendens (LIS) from your lender alerting you
  to a pending foreclosure? Regardless of the
  circumstances that led to your default, you
  should know that foreclosure is NOT your only
  option! Other options for you to consider
  include
• Full Reinstatement
• Creditor Negotiations Loan Modification
• Bankruptcy
• Short Sale
• Remember, allowing the bank to foreclose means
  losing your home and damaging your credit. This
  is the worst possible outcome and should only be
  considered as a last resort.

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Foreclosure Process

• Before we go deeper into how to stop foreclosure,
  lets start by explaining how the Foreclosure
  Process works. This process is different
  depending on your state and local laws, but
  generally depends on two different types of
  foreclosure
• Judicial Foreclosure - The lender issues a Lis
  Pendens (LIS) when the homeowner defaults on
  their mortgage and sues the homeowner in order to
  get a judge to sign off on a Notice of
  Foreclosure Sale (NFS), which allows them to sell
  the home at auction.
• Non-Judicial Foreclosure - The lender and/or
  trustee issues the homeowner a ?Notice of Default
  (NOD) when they default on their deed of trust.
  If the arrears are not addressed, the lender
  issues a Notice of Trustee Sale (NTS) and sets an
  auction date.
• PLEASE NOTE It may still be possible to prevent
  a foreclosure sale even after a Notice of Sale
  has been issued. However, your best chances of
  stopping the impending foreclosure of your home
  is before a Notice of Sale is issued, during a
  time known as the pre-foreclosure period. Check
  your local laws to find out which type of
  foreclosure applies to you.

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Full Reinstatement

• This is the easiest and most painless way to stop
  foreclosure because
• If you can repay your arrears in full, your house
  will not go into foreclosure.
• There is absolutely no risk of losing your home
  or damaging your credit at this stage.

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Full Reinstatement

• PLEASE NOTE Chances are that if you fell behind
  on your loan payments then the money simply isn't
  there to pay off the debt. Consequently, this
  isn't a suitable option for everyone.

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Creditor Negotiations Loan Modification

• If you are unable to repay your arrears in full,
  the next option is to meet with your lender and
  discuss an alternative to paying off your loan at
  the current rate. Trying to negotiate with the
  lender is the second best option to paying off
  your arrears in full. An understanding lender can
  stop foreclosure and prevent you from losing your
  home and ruining your credit.
• The most common of these options is a Loan
  Modification.

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Creditor Negotiations Loan Modification

• Loan Modification
• Allows you as the homeowner to negotiate a lower
  monthly payment and interest rate with your
  lender.
• If you need assistance negotiating with your
  lender, consult a representative from the U.S.
  Department of Housing and Urban Development
  (HUD). You may qualify for the federal Home
  Affordable Modification Program (HAMP).

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Creditor Negotiations Loan Modification

• Other potential creditor agreements include
• A third party settling your home loan for less
• You can negotiate to have a third party settle
  your home loan for less than the original amount.
• Success with this method may depend on how much
  your home is currently worth versus how much it
  was worth at the time you took out the loan.
• Paying as much upfront as possible
• Ask your lender to agree to let you pay them as
  much of your arrears upfront as possible. 
• Arrange a new monthly installment plan for paying
  off the rest.

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Creditor Negotiations Loan Modification

• Forbearance
• The lender may agree to stop foreclosure so long
  as you make good on a promise to reach a certain
  requirement.
• This might include setting a due date for a
  specific payment, making repairs or possibly even
  selling the property.

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Bankruptcy

• If you've reached a point where you are unable to
  repay your arrears and loan modification or other
  forms or creditor negotiations are not an option,
  you still have some choices. Unfortunately, few
  options at this point will not result in the loss
  of your home or damage to your credit score. If
  you care more about keeping your home than
  damaging your credit, you may want to consider
  bankruptcy. 
• There are two types of common bankruptcy
  procedures for individuals
• Chapter 7
• Allows the government to liquidate, or
  redistribute, your assets.
• Property is usually exempt from liquidation when
  an individual files for Chapter 7, but check with
  a bankruptcy counselor recommended by the U.S.
  Trustee Program to be sure.

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Bankruptcy

• Chapter 13
• Allows the homeowner to receive financial
  reorganization under the guidance of a federal
  bankruptcy court.
• The homeowner gets to keep most of their assets
  and is able to relieve additional debt not
  allowed under Chapter 7.

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Bankruptcy

• PLEASE NOTE Filing for bankruptcy usually
  postpones a foreclosure but does not stop it
  entirely, and a bankruptcy will damage your
  credit for 10 years versus five years for a
  foreclosure. This should only be an option if you
  are determined to keep their home at any cost.

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Short Sale

• A short sale should be considered as a last
  resort to stopping foreclosure. The process will
  involve losing your home and damaging your
  credit, though it does not remain on your credit
  history as long as a foreclosure does. A short
  sale is
• When the homeowner arranges an agreement with
  their lender to sell their home themselves for
  less than it is worth to pay off the remaining
  debt.
• Also referred to as a pre-foreclosure.

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Short Sale

• PLEASE NOTE If you sell the home for less than
  the remaining amount of your arrears, you may
  still be responsible for paying the rest.

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Let's Review

• Depending on your state and local laws, your
  foreclosure proceedings may be Judicial
  (requiring court approval) or Non-Judicial (no
  approval required).
• The best time to stop a foreclosure is during the
  pre-foreclosure period after an LIS or NOD has
  been issued, but before you receive a Notice of
  Sale.
• The best way to stop foreclosure is to Fully
  Reinstate your lender and pay off your remaining
  arrears entirely.

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Let's Review

• Loan modification or other creditor negotiations
  may prevent you from losing your house and/or
  damaging your credit.
• Chapter 7 or Chapter 13 Bankruptcy allows you to
  keep your home, but damages your credit for
  longer than a foreclosure and may only postpone
  rather than stop a foreclosure.
• A Short Sale is a last resort to stopping
  foreclosure where you will lose your home and
  damage your credit, but for not as long as a
  foreclosure would.

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Need More Advice on How to Stop Foreclosure?

• There are a couple of different resources you can
  turn to
• The U.S. Department of Housing and Urban
  Development (HUD)
• HUD has counselors on hand to help homeowners
  seeking loan modification.
• The federal Housing Home Affordable Program
  (HAMP) may be able to assist you further in
  achieving loan modification if you qualify.

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Need More Advice on How to Stop Foreclosure?

• The U.S. Trustee Program
• If you are considering filing for Chapter 7 or
  Chapter 13 bankruptcy, you may want to consult a
  bankruptcy counselor first. The U.S. Trustee
  Program will lead you to a trustworthy counselor
  in your area.
• The Bankruptcy Abuse Prevention and Consumer
  Prevention Act (BAPCPA) makes it easier for
  individuals who are considering filing for
  bankruptcy to seek counseling.

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Need More Advice on How to Stop Foreclosure?

• ForeclosureDeals.com
• Our article on how to Stop Foreclosure can tell
  you more about the options we've presented.
• Still unclear on how the foreclosure process
  works? We have an article on understanding the
  Foreclosure Process.
• Need to know if foreclosures in your state are
  Judicial or Non-Judicial? Find out with our
  Foreclosure Laws list.
• If you choose to sell your home during the
  pre-foreclosure period, our section on
  Foreclosure Short Sales and Pre Foreclosures can
  assist you.
• The Glossary section will familiarize you with
  any terms related to foreclosure to which you are
  unfamiliar and require further explanation.
• Want to know what may happen if your home does go
  into foreclosure? Our FAQ provides you with some
  insight.

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