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There are many ways to avoid foreclosure. The government has introduced new programs to help people at risk of losing their home to foreclosures. Banks also have their own programs to avoid foreclosures. Bankruptcy can be used to temporarily or permanently avoid foreclosures while you reorganize or renegotiate debt. To avoid foreclosure, you should always pay attention to default notices from your lender and try to take early action.
Government Programs Can Help Avoid Foreclosures
The federal government sponsors several programs to help avoid foreclosure. You may qualify for a government loan modification to lower your house payments, interest, or balance due on your loan. Special government programs focus on helping those have lost their jobs and those whose home values are “underwater” and have dropped below what is owed. To learn about your options, contact your lender or the Federal Housing Administration’s National Servicing Center.
Traditional Refinancing Can Avoid Foreclosure
If you do not qualify for a government program to prevent foreclosure, you may still qualify for traditional private refinancing. If your income is stable and your credit is good, a private lender may give you a new mortgage with a lower interest rate. Lowering your monthly payments can avoid foreclosure by making your bills more manageable. Your house must appraise for the refinance amount.
Giving Back Your Home Avoids Foreclosure
Some lenders allow you to give back your home to avoid foreclosure. This is done by signing a Deed in Lieu of Foreclosure. Because it avoids foreclosure, this may help your credit – but you are giving up your home in the deal. After this happens, you might be able to rent the home from the lender. Ask your lender if you will still owe money if your home is worth less than the mortgage after you give it back. This is called a deficiency balance and can create problems even after you have given up the house.
Bankruptcy May Avoid Foreclosure
Filing for bankruptcy generally does not cancel your house mortgage, but it can get rid of other bills like credit card debt. This may make your mortgage payments more manageable and allow you to avoid foreclosure. Filing for bankruptcy temporarily stops a foreclosure while the bankruptcy case is in court. Sometimes, this gives you time to reorganize your bills or negotiate with your lender. Bankruptcy hurts your credit scores, so you should consider it only as a last resort.
A Foreclosure Lawyer Can Help
The laws surrounding residential foreclosure can be complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a real estate lawyer.