With home values falling quickly while mortgage balances go down ever so gradually, you do not need to let the bank foreclose or declare bankruptcy if you need to move or cannot afford your home any more. A short sale could be an alternative to resolve your dilemma. Banks don’t care to to own homes, they really do want to work with you!

A short sale is when the lender will agree to less than the mortgage balance due on the home. But not everyone will qualify for this.

You need to ask yourself the following four questions:

1. Are you experiencing a hardship? Examples of hardships include monetary (ie – lose job), medical (disease/illness that prevents you or a family member from working), death of a spouse, divorce to name a few.

2. Are you behind in payments? Has this only recently started? How many payments are you behind?

3. Have the lender(s) been contacting you? Lenders for both your primary mortgage and junior loans (example -home equity loan) can start calling or mailing you letters of default as early as 30 days late.

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After the lender has filed a formal lawsuit against you, your options become more limited. Additionally, time is of the essence. All parties of the lawsuit must adhere to a certain timetable. Because I am not an attorney and the laws differ from state to state and county to county, please refer your questions to an attorney. Perhaps I will have an attorney write an article for this blog in the future. Stay tuned to this blog by signing up in the upper right hand corner so that you won’t miss any information. We will post links to various resources. Here are your options after the lender has filed a notice of default:

1. Reinstate the loan – You may pay the lender the back payments, interest, penalties, legal expenses, and all other expenses associated with the collection of the debt and reinstate the loan. This action will stop the foreclosure.

2. Seek a “short sale” – If your house is worth less than what you owe, you may convince the lender to accept a “short sale”. A short sale is when the lender accepts less than what you owe as full payment of the loan. There are various laws and criteria involved. Additionally, there may be paperwork that must be completed before the lender even agrees to ponder a short sale. If you are interested in pursuing a short sale, submit information about your property to us. We have relationships with various firms that negotiate short sales.

3. File bankruptcy – Bankruptcy should be a last resort. Please keep in mind that the bankruptcy will not stop the foreclosure. It will only postpone it. Contact a bankruptcy attorney for more information.

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Avoiding foreclosure is a good incentive, and homeowners are given a fresh start. Loan modification in Orange County is another option that lenders are currently using, and gives people the chance to negotiate a different set of terms with the lender. Avoiding foreclosure is in your lender’s best interest as well. But it has to be a negotiation that lenders can live with, as well as something that works for you. Avoiding foreclosure is important for many reasons. A bankruptcy is not as bad as a foreclosure on a credit report.

Mortgage contracts can be difficult to understand. It’s always wise to involve an attorney, even if you don’t need an attorney present when signing a mortgage in the state you live. Mortgage foreclosure is many peoples horror but it should be predicted since nobody can ever foretell your future. You must think of the tactics on how to get round this nightmare or if you are experiencing it, find methods for how to stop mortgage foreclosure. Mortgage giant Freddie Mac has conducted studies that consistently show that a large majority of homeowners simply don’t know that they have any options at all to avoid a foreclosure once they receive their first default notice.

Stopping foreclosure can quite literally save a mortgage borrower from thousands of dollars in unnecessary loss and better than cut in half the time to recover enough to be able to secure a new purchase money mortgage. Stopping foreclosure is a simple process, but it is still a long and tedious one.

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Sometimes, the only way to stop foreclosure is to forward a hardship letter to the lender. You may be asking them for a loan modification or some form of leniency that will permit you the chance to right the errors, but you cannot just write a bland letter and hope it will work out for you.

Even if it is not a letter… even if you have decided to walk up to them and sit across the negotiation table to propose a new workout plan for the old mortgage, you still have to make the right pleas, especially when nothing else seems to work.

Remember, the pleas that will work in your favor to stop foreclosure must be ones that are able to convince your lender that the situation you are in, which caused you to default on your mortgage payments, was totally out of your control. Also, they must say that you are going to rectify the problems, and that you are willing to work out other terms with them.

A temporary, involuntary, and unavoidable situation plea often gets them to be a bit friendlier, and they just might give you the chance to make up your mortgage payments on time.

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