Foreclosure is a stressful event. If you feel confused and scared, it is understandable. Remember that many families are in the same boat. Our economy is still going downhill. The unemployment rate is skyrocketing. However, if you take action, the chances to save your home increase dramatically. The only problems you might encounter will come from your state of mind. Do not despair. Keep a positive attitude and bond stronger with your family and loved ones. However, there are some actions to be taken. Just being positive won’t do the job.
- Contact your lender even before the first payment is missed. This way they will know what to expect and you will feel better. Comply with your lender’s guidelines and send the paperwork requested in a timely manner.
- During the first three months of delinquency your lender will not take any legal action. It is time to reorganize your finances, look for another job or find any other financial solution.
- The next step is forbearance agreement. This means to postpone or reduce the payments due for a certain period of time (usually three to six months). There is a way you can go through the forbearance agreement payment free.
- If the financial hardship is still present, then it is time for the short sale process. You can check my other articles for more information on how to do it. This step alone can postpone the foreclosure for more than one year, may be two. And it is payment free.
- At any time you can apply for loan modification. My opinion is that this home affordable program failed. The lenders do not know what to do and how to do it. The process is slow and does not stop foreclosure.

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When a homeowner is facing foreclosure, they are bound to hear lots of words that are quite difficult to comprehend. A big reason for this is that foreclosure real estate has its own language thanks in part to legislation and law. With no background in this area, real estate investors are unable to get through the easiest foreclosure contracts. If you want to be a real estate investor, it’s necessary to learn the foreclosure-related terms.
Abandonment – A homeowner (property owner) who has decided to give up rights to the property without any coercion and fails to retrieve the rights or pass those rights to someone else. A situation where a property is unused is not considered abandon.
Acceleration Clause – This is a clause that is often seen in mortgage contracts that allows the lender the option to demand full reimbursement right away instead of at the end of contracted term. It must be stated when this will happen including default on regular payments, the sale of property or property rights re-assignment. Debtors are usually told within a reasonable amount of time with a chance to reverse this. A contract without this clause means the debtor is immune from any acceleration.
Chattel: This is personal property that includes household items.
Closing Costs – Closing costs are expenses unrelated to marketing and selling of property; these costs are seen in loan and paperwork fees. Foreclosures tend to involve fees for legal and escrow.
Deed In Lieu Of Foreclosure – When foreclosure is imminent, property owners have the option to hand their deed over to the lender instead of going through the process. In order for the deeding to be certified, the lender needs to be approved.
Default – This is when the borrower fails to make payments to the lender; this could mean missing a payment without further problems or too many payments that result in a unsuccessful mortgage
Equity Rights Of Redemption – The borrower’s rights to eliminate all burdens that are related to the mortgage, in an attempt to circumvent foreclosure.
Federal Housing Administration – The FHA is a part of the Housing and Urban Development; this federal agency is in charge for setting trade standards for all mortgage loans given by private lenders. The FHA will also insure all mortgages; foreclosure investors will often deal with the FHA.
Federal National Mortgage Association – commonly named Fannie Mae; this is the federal agency that oversees the conventional housing mortgages and will often purchase loans that follow its government rules. Several foreclosure investments will require investors to have direct communication with the agency.

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