Is it a possibility to stop the foreclosure process if it has already started against a house? If you’ve had a lot of phone calls from your lender and you’ve received mail with late notices and warnings, you’re probably thinking about this every day. Unfortunately, many people deal with this every day, but not many people know what to do to buy you some time and stop the foreclosure. Here are some options:
It is easy to feel like you’ve ran out of options and that you have no power when your mortgage company starts foreclosure. A lot of people don’t know that they may be able to slow the foreclosure process or even to stop foreclosure completely. Why let your house foreclose simply because you didn’t know there were other options. Here’s some things you can do to hopefully stop your foreclosure.
When you slow down the foreclosure, it may give you time to stop the foreclosure altogether by using one of these foreclosure stopping ideas.
The best way to stop foreclosure on your home is to slow the foreclosure process. Many Americans don’t know this is possible, but it is critical if you want to do something with your house before the foreclosure is finished. Slowing foreclosure can give you time to look at foreclosure alternatives, including a sale to a fast home buyer such as us or a loan modification, short sale or deed-in-lieu of foreclosure.
Did the master in equity court already send you a Lis Pendens? Then you need to move quickly to stop the foreclosure process.
Reinstate you mortgage
How do you stop the foreclosure process with the least amount of pain and stop foreclosure immediately? All you have to do is pay all of the mortgage payments you already owed, the current mortgage payment, all the interest that has built up on the loan and pay the foreclosure attorney’s fees and court costs at the same time. Ok, I know this sounds overwhelming… it is! The interest, attorney and foreclosure court costs add up so fast that it’s all but impossible to pay them all at once out of pocket, and unfortunately, your lender will accept nothing less than all of the payments and costs at one time in order to stop the foreclosure. They do not negotiate- it’s all or nothing.
If your income has been lower than normal or if you inherited another property and just need extra time to get the cash, this option may work. However, the costs never stop adding up until you pay your mortgage lender all the back payments in full. Reinstating the loan may work for a home owner who is behind on mortgage payments due to a short-term cash shortage. Are you going to inherit a big chunk of money in the next month or receive an insurance settlement in the next month? If so, you may be able to pay all of the late payments and fees to catch the loan up.
If you want to bring your loan current, you’d need to speak to the mortgage lender’s foreclosing attorney and also the mortgage lender.
If this is an option, make all of the payments NOW to stop the foreclosure process fast.
Ask for a deed-in-lieu of foreclosure or loan modification
Another possibility to stop the foreclosure process is to get the bank to accept a deed-in-lieu of foreclosure. Basically, you ask the bank to accept a deed for the house and if they say yes, the foreclosure will stop. You will still owe the lender for their loss on the loan, but at least it will stop the foreclosure. Out of the many homeowners we have worked with, almost zero have ever got a bank to accept a deed-in-lieu of foreclosure. If your loan is with a small community bank, that is probably the only time you’ll ever even have the possibility to have this as an option.
Want to try a loan modification? With a loan modification, the lender would either stretch out the length of your loan, lower the interest rate or principal amount. Banks often make it sound like they will talk to you about a loan modification just so that they can get you to send all your current financial information in to them. Hello!? Do you think that’s a great idea when they can use that information to collect on the deficiency judgment you may owe the bank from the loss they will take on the foreclosure? Out of all the homeowners we’ve seen apply for a loan modification, virtually none actually received one. If you are one of the few people who is able to get a loan modification and you’re able to make your payments and maybe catch up all of the other payments first, it will stop the foreclosure process. If you’re with one of the big banks, you might as well forget about loan modification as an option to stop foreclosure.
Work on a short sale
A short sale is where the bank allows you to sell the house for less than you owe on the loan (you may still owe them the difference). You need to find a buyer or attorney who knows all the ins and outs of short sales and can negotiate a short sale. The lender is most likely not going to let you work on or negotiate your own short sale- they’re not exactly happy about the situation right now.
Short sales typically take anywhere between 90 days to 11 months from the buyer’s purchase offer to closing.
In order to submit your paperwork for a short sale, you must prepare a short sale package, including:
- Your fully updated financials (do you think it’s a great idea for the lender to know where your money is at this time, while they want to squeeze every penny out of you that the can?)
- authorization to release information
- Last two months of payroll information
- bank statement from the previous two to three months
- a letter of hardship
- request for mortgage assistance
- preliminary closing statement that you need to get an attorney to fill out
- at least two years of W-2’s and tax returns
All-in-all, short sales have become excruciatingly painful over the last several years and even if you have a good purchase offer for the house, you may wait month after month for the bank to approve it, only to find out many months later that they are denying the short sale and going to finish the foreclosure promptly. Although it is possible to stop foreclosure with a short sale, it is best to avoid a short sale, if possible, for the reasons above.
Bankruptcy is another possible solution. It can stop the foreclosure process, albeit temporarily. When someone files for bankruptcy, an automatic stay is imposed and it temporarily stops foreclosure, although the interest payments, attorney’s fees, foreclosure fees, etc. can continue to add up.
Chapter 7 bankruptcy is most often used to delay foreclosure because it’s faster and less expensive Chapter 13. With Chapter 7 bankruptcy, a trustee is appointed a sells non-exempt property to pay off your loans. Losing some of your things is definitely possible when filing for Chapter 7 bankruptcy. If you file for Chapter 7 bankruptcy, your lender may (and usually does) file a motion requesting relief from the automatic stay, to continue with the foreclosure. In other words, filing Chapter 7 briefly slow but not stop the foreclosure.
If you file for Chapter 13 bankruptcy, it could can stop the foreclosure for a longer period of time. Chapter 13 bankruptcy can take somewhere between six months and many years to finish. It may also destroy your credit even more than Chapter 7 bankruptcy destroys credit, which is already really bad.
I’m sometimes shocked that people will try to delay a foreclosure by filing for bankruptcy. Often, there’s very little equity in the house in foreclosure anyway and if the house forecloses, it will probably only ruin your credit for 7 years, versus 10 years or longer with bankruptcy. Since bankruptcy is not a great long-term solution anyway, why specifically choose to destroy your credit for 10 years, rather than the 7 years it would last for a foreclosure.
Sell the house fast to a profession home buying company
Perhaps the best solution of all to stop foreclosure is to sell the house fast to a professional home buying company that can pay cash for the house, which will stop the foreclosure process dead in its tracks. Selling the home in foreclosure to a professional home buying company will allow you to sell your house for the most money, prevent foreclosure and it will allow you to extract the most money from the house since the foreclosure fees and interest will stop immediately and they do not charge any real estate commission. If you’re ready to save your credit and stop foreclosure today, simply fill out the brief seller info. questionnaire on this website today or call (843) 553-5005.