Your legal rights in the foreclosure process, what you need to know.

There are several options to pursue in preventing your foreclosure.

Facing foreclosure is an extremely stressful situation. You need to know what your alternatives are before losing your home. Because of the complicated nature of these proceedings, you should also seek counsel before making any permanent decisions. Below are several alternatives to foreclosure that you may discuss with your attorney.

Forbearance. Your lender may be able to adjust your repayment plan based upon your current financial situation and provide for a temporary reduction or suspension of your payments. You may qualify for this if you've recently experienced an involuntary interruption of income or extraordinary expenses.

Modification of the mortgage. Your lender may allow you to refinance the debt and extend the terms of your mortgage loan. This may allow you to reduce the monthly payments to a more affordable level. .

Partial Claim. If your home is insured by FHA or VA, your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current, if you qualify.

Pre-Foreclosure Sale. Upon going into default, you can sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. This may allow not only the sale of the house but also saves some of your equity.

Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but may help your chances of getting another mortgage loan in the future.

Keep in mind that your lender does not have to accept all proposals and are not obligated to do so. You need to assemble a credible case as to why the lender should accept these options. Don’t wait till the last minute to contact your lender. If your lender refuses to take partial payments, you should put this money aside to help negotiate with the lender later. It is most likely that the foreclosure process will continue despite the possibility of a workout agreement. Keep all lines of communication open.

 

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