Homeowners facing repossession of their homes should act immediately to stop foreclosure before it is too late. Foreclosure refers to the legal process by which a lender repossesses an asset used as a security for a loan after a default in monthly payments. It can be avoided through certain ways such as the following.
1. Sell Your Home
Sell your home to a friend or family member and use the money to clear off the foreclosed loan on the property. Lease/rent the property back from them. Another feasible alternative would be to sell to the property outright by listing the house as a For Sale By Owner or enlisting the help of a local state broker.
2. Short Sale
A short sale happens when the amount of the property being foreclosed is lesser than the amount owed from the lender. Both the lender and borrower prefer this route over foreclosure because it helps avoid hefty bank fees and poorer credit report. In the part of the borrower, it will still mean losing one’s home similar to the result of a foreclosure but the advantage of this one is that it inflicts lesser damage to his credit rating. However, the borrower still has the obligation to pay the outstanding balance of the loan.
3. Deed-in-Lieu of Foreclosure
In this option, the homeowner voluntarily gives the property to the lender as full payment for the loan. While a Deed-in-Lieu of Foreclosure (DIL) may not be any better than foreclosure in the sense that it affects one’s credit rating the same way and it would require the homeowners to vacate the property, it helps avoid sheriff sale and eviction process. It is also better than short sale if you consider the fact that there is no more deficiency left for you to pay for.
4. Bankruptcy
Bankruptcy, which is the legal process of declaring one’s inability to make payments for one’s debts, is another option that you can consider to stop foreclosure. Chapter 7 bankruptcy will allow you to return the property and eliminate all your loan obligations that involve this property as a security. If you are current on your mortgage payments, you may be able to retain your home with this type of bankruptcy.
Whatever option you have chosen, it is crucial that you take immediate action and consult an attorney to be able to stop foreclosure of your property.
