A foreclosure program can help you save your home from foreclosure. Five popular foreclosure prevention programs that homeowners are using right now are loan modification, forbearance, reinstatement, short sale or deed in lieu of foreclosure. A foreclosure defense attorney can help you determine which option is the right one for your financial situation. The attorney can also review your mortgage documents to find out if your lender committed any predatory loan practices or violated any mortgage lending laws to use as leverage when negotiating with your lender.
Loan Modification
A basic modification involves your lender modifying your existing mortgage by lowering the interest rate and extending your loan term. Loan modifications help lower your monthly payment to one that you can afford. You have to demonstrate that your financial hardship is temporary, and you have the ability to pay back the loan.
Forbearance
Forbearance is a short term agreement where your lender allows you to catch up on your arrearages and then you go back to paying your regular payment once you are caught up.
Reinstatement
Reinstatement involves paying your past-due amounts and any fees and other costs.
Short Sale
A short sale is when your lender allows you to sell your home for less than what you owe on your mortgage balance. The sale proceeds satisfy your mortgage debt, and you walk away owing nothing to your lender.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is when you transfer the ownership of your property back to your lender and walk away owing nothing. Not all lenders will accept a deed in lieu of foreclosure.
Here are some other tactics you can use to fight your foreclosure:
- Stay in your home and not pay any mortgage payments while negotiating with your lender. Your attorney can stall foreclosure proceedings for a few months while your lender is processing your foreclosure program paperwork.
- Your attorney can conduct a mortgage loan review looking for violations by your lender of Real Estate Settlement Procedures Act (RESPA), Equal Credit Opportunity ACT (ECOA), Truth in Lending Act (TILA), and Racketeering and Corrupt Organizations (RICO). Your lender is required to provide you with the proper disclosures and notice of rescission at the time they make your loan. If the disclosures or notice are inaccurate, you may be able to rescind your loan and collect money damages. If the audit reveals improper or illegal actions by your lender, your attorney can use this in your defense to get your lender to stop your foreclosure and approve you for one of their foreclosure programs. Lenders face fines and penalties for violations.
- Strategic Default. This tactic has been used by homeowners who can afford their payments, but who are upside down on their mortgages and have decided to walk away from their property because they have no hope of recouping their equity. However, Fannie Mae and Freddie Mac have recently announced new restrictions against homeowners who do this. They will not be able to get a new mortgage backed by Fannie Mae for seven years, and Fannie Mae is pursuing deficiency judgments against strategic default borrowers if state laws permit.
Hire a Foreclosure Defense Attorney
The best way to fight your foreclosure is to hire a foreclosure defense attorney. The attorney can advise you which foreclosure program will benefit you the most. Since the attorney is an expert in foreclosure and mortgage laws, the attorney can defend you against foreclosure and help save your home.
