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How To Avoid, Delay Or Stop A Foreclosure

Mar 21, 2008
Don't Lose Your Home to Foreclosure

Tips on saving your home:

Should you sell or try to keep your home?

a. You should try to keep your home if at all possible. If your total monthly monthly housing expenses (including: principal, interest, taxes, insurance, mortgage insurance, and association fees) does not exceed 40% of your gross monthly income: more than likely, you can hold onto your home.

If your monthly expenses are greater than 40%, then you may want to consider selling or transferring title to avoid and negative impact on your credit.

b. Don't give away or lose your equity. Consider cashing out and hold these monies as back up reserves.

c. Keep your credit ratings high--you may need it later.

Financial Setback:

If you are recovering from a temporary financial setback; you will need to prove to the lender that you will be able to come back to your previous standard. The process to prove recovery to the lender will take time and effort on your part but is free.

Assemble a complete documentation package to prove income, assets and debts along with letters of support proving your employment and income will continue. Submit this package to the lender.

It will go to their under writing department. The lender will review this package and determine if they will approve a workout program for the homeowner or decline them.

Current Lender Workout:

1. Can you make up the outstanding balances (payments) over a period of time?

2. Ask the lender to re-write the note that includes all of the defaulted amount including all fees. However; the lender may not allow this if you have had a poor payment history in the past.

The best candidates for negotiations are the homeowners that can prove they have recovered from a temporary setback. Lenders will not consider negotiations if they think they may have to go forward with a foreclosure in 4-6 months.

3. You may offer the lender a "Deed in Lieu of Foreclosure". This is giving all ownership of the property back to the lender instead of going into foreclosure. This will preserve your credit.


If you have equity in your property but have gotten behind; you could possibly refinance and take cash out up 70% of the value of the property. Or; you may consider placing a new second mortgage to get cash out that totals 70% combined value with the current first mortgage.

Keep in mind that both of these resolutions will have higher interest rates and possibly other possible penalties.

Private Loans Can Help You Get Current:

1. The best is to ask and receive money from your family or friends to help you until your finances improve. Make sure you will be able to repay them before accepting their help.

2. Hard Money Lenders or Private Lenders are private investors that loan money at a higher interest rate with penalties for a short period of time based on equity in the property. Income and credit are of little importance.


This will have a major impact on your credit for many years. If your lender has filed a letter of default, you still have time to try to sell or refinance your property.

Try to do this before you miss or are late on the 3rd payment. It will more difficult to refinance after that.

Chapter 13 is the most common way to delay a sale: But; you have to maintain payments and keep them current. This will delay the property from going to auction. Once a bankruptcy has been filed, all of your financial matters will be controlled by the courts.

This greatly limits all of your options. At this point, Legal advice is your only option.

Lease Buy Back:

Do Not!!! Do Not!!! Get caught in this trap.

This is a common con. You sign over title (ownership) of your property to someone that promises to get you current and maintain payments.

You will continue to live in your home and pay them rent. The reality is: You have lost ownership of the property but are still financial obligated for the mortgage (Note).

You are relieved of the debt.

The new owner does not usually make the payments and this sends the property into default, you are the renter and can be evicted. This ruins your credit.
About the Author
Keith Junor is a Licensed Realtor and Mortgage Broker in Florida with 17 years experience. He authors a Blog at www.The expertsinrealestate.com that gives timely advice on buying and selling, credit repair, mortgages and foreclosure. He can be reached at kj1010@bellsouth.net
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