How to Legally Stop Foreclosure When in Danger of Losing Your Home
Originally posted on https://www.pocono-lawyers.com/how-legally-stop-foreclosure-danger-losing-your-home
The best way to stop foreclosure is obviously to prevent things from getting to that point in the first place, but sometimes people run into circumstances beyond their control. Fortunately, there are many options available to the property owner to avoid foreclosure. More on that later…
What Is Foreclosure?
Foreclosure is a legal process wherein a bank or financial institution is seeking to recoup it’s investment made to a borrower if that borrower fails to make the payments necessary to repay the loan on the property. Every state has different variations on the regulations that govern the foreclosure process. For example, foreclosure in Pennsylvania is a judicial process meaning that it has to go through the courts, but this is not necessarily true in all states. The end result in Pennsylvania is if the lender gets a judgment in their favor and completes the foreclosure process, the lender receives a deed to the property and can dispose of that property for whatever value it deems proper. Sheriff sales of properties are those that have gone through the entire process of foreclosure and placed on the auction block for sale. This is usually not a desired outcome for the borrower who would like to keep their home. Foreclosure is usually easier to mitigate and avoid formal process if you deal with the situation earlier rather than later.
What to Do When Facing Foreclosure
When faced with foreclosure, owners would be well advised to seek the competent and experienced counsel of a real estate attorney who regularly handles these matters. The reason being, lenders are often quite willing to negotiate the terms of the loan and repayment options just to avoid the legal expense of filing a foreclosure lawsuit. Here are a few suggestions that may help prevent things from reaching that point.
Don’t Ignore the Problem
First, do not ignore the problem. It will not go away, and it only gets worse. Open and read any mail the lender sends you. Claiming “I didn’t get the notice” rarely works. Also, read your original mortgage agreement so you understand both your rights and legal obligations. If you go to a lawyer, make sure you take along this document because he or she will want to see it.
Know the Local Laws
Get to know about the laws in your state, so you understand the timeframes you have to work with. Foreclosure is a legal process, so you will have time to take action. Your attorney will apprise you of the facts and you can look up the State Housing Office for more information. Remember, this is the time to prevent foreclosure.
Review Your Finances
Review your spending habits and budget. For most, after healthcare and food, housing is the most important expense. Extra cable TV channels, gym memberships, and entertainment are optional and secondary. Think lean and prioritize.
If income is a problem, perhaps you or someone in the household should consider a second job. Even part-time work will help. This could put you back on track with the mortgage company. Another potential source of cash could be various assets like a spare vehicle or a whole life policy. Make sure to get some legal advice before making this move, but it could demonstrate to the lender your willingness to make some sacrifices to avoid foreclosure.
Be Aware of Scammers
Be wary of scams. There are companies that prey upon people in financial distress. In some cases they claim they can negotiate with the lender on your behalf, but often all they do is charge hefty fees on the back end that put you deeper in debt. Usually, they just get the same arrangement that the lender would have given you anyway. Other companies may ask you to sign documents which essentially turn over the title of your property to them, so you basically end up renting your property from the new owners. It may stop you from being homeless but is clearly not as desirable an option as getting to keep the ownership of your home.
Are There Other Options?
Due to the high number of foreclosures in many areas of the country, including Pennsylvania, some states or individual counties have implemented foreclosure diversionary programs to assist borrowers in finding a way to avoid foreclosure. These programs vary by state and county and are not available in all locales. Foreclosure diversion programs may allow the borrower extended time to negotiate with the lender to avoid foreclosure.
Monroe County in Pennsylvania for example, has a good example of a diversionary program. However, they do vary by specific county. In Monroe county, borrowers and lenders are brought face to face to seek a conciliatory agreement with both parties setting mutual payment terms on the mortgage obligation. The time limits to initially file are strict, but borrowers who qualify for the program may have 60 or more days to reach a settlement with the lender.
As always, it is best to seek professional legal advice. The foreclosure process is complicated, and you will be signing legally binding agreements. So you need to understand what you are getting into. An experienced real estate attorney will be able to guide you through to the best possible outcome.
Disclaimer: We are a debt relief agency. We help people file for relief under the bankruptcy code.