Those who live in Idaho have every reason to seek a reason to stop foreclosure, since they have the fifth highest foreclosure rate in the nation. The foreclosure process is very simple when a borrower defaults on their mortgage, since non-judicial foreclosure is the primary method used. That generally means there is a power of sale agreement in the mortgage, which, in this title theory state, is held in trust until the terms of the mortgage are satisfied. The process generally takes 150 days in Idaho, giving the borrower 115 days to cure the default and redeem their property before it is sold at a public option. There are a number of options by which an Idaho resident can cure the default; however, the requirements to qualify can be complex. A counselor from the U.S. Department of Housing and Urban Development (HUD) can often provide free or low-cost advice, while an attorney committed to the debtor’s case can provide invaluable counsel.
Assistance Programs from the Federal Government
The government provides financial incentives, as well as new laws, to help homeowners save their homes and provide stability to families in these troubled times. Some of the most beneficial programs are:
- Incentives for lenders to refinance loans and to adjust the terms of variable rate loans to fixed rate, low interest loans, which is found in the Homeowner Affordability and Stability Plan.
- Government incentives can also be found in the Hope for Homeowners Act, whereby lenders are encouraged to adjust the terms of mortgages and refinance others to provide low-rate and fixed-rate loans with FHA backing. Other incentives go to lenders who lower principal amounts for borrowers and waive early or late payment fees.
- Whereas the law previously allowed the IRS to tax forgiven debts as income, the Mortgage Forgiveness Debt Relief Act of 2007 now protects homeowners from this tax.
Assistance from Lenders
While lenders generally do not contribute to the finances of borrowers, with so many foreclosures taking place, it can be to their advantage to help some homeowners stop foreclosure. It is a mark of good faith when borrowers contact their lender, often through their loss mitigation department, early, before they miss any payments or default on their loan. They may be able to negotiate one of these agreements:
- Lenders may forgive a few missed, partial, or late payments through forbearance if they believe the homeowner has good prospects for getting back on track in the near future.
- Creditors may be willing to modify a mortgage if they believe the borrower will be able to keep up payments at a lower rate or more favorable terms.
- If the borrower can show evidence that they will be coming into more money in the near future and make several large, or one lump sum, payment to catch up on the mortgage, the lender may reinstate the loan at that time.
Assistance through Bankruptcy
Though bankruptcy carries a heavy penalty in years of damaged credit scores, it provides an opportunity to begin rebuilding that score more quickly than some of the other options. And in fact, either of the primary individual bankruptcy options includes an automatic court stay, or hold, on foreclosure or collection activities, giving the borrower time to select the best financial solution.
- Chapter 7 bankruptcy allows a debtor to have much of their consumer debt discharged, or wiped out, though some of their personal property may be liquidated in the process. In Idaho, however, there is a $100,000 homestead exemption that allows most borrowers to keep their homes.
- Chapter 13 bankruptcy allows the debtor to reorganize their finances and present a repayment plan to have all their debts satisfied by a specified date. If the court approves, the debtor must make all those payments for the life of the agreement in order to keep their home and property.
Assistance through Home Sales
If none of the other alternatives to foreclosure work, the homeowner may be faced with losing their home. If that is the only alternative, selling it themselves can be preferable to losing it to foreclosure. They may be able to sell it for more than the loan amount; however, if they are unable to do so, they may be able to transfer the property in other ways to stop foreclosure.
- Their lender may approve a sale for less than the remaining house note in what is known as a short sale. However, the borrower must ask for this agreement in writing, since Idaho allows lenders to sue for deficiency, or the remainder of the loan.
- Their lender may also be willing to receive the deed in lieu of foreclosure to satisfy the house note. The lender may also choose to leave the borrower’s credit score intact, depending on the circumstances.
Getting Legal Help Stopping Foreclosure in Idaho
An Idaho foreclosure lawyer knows the legal options available to struggling homeowners and can provide the kind of counsel they need to stop foreclosure. In addition, HUD counselors can guide the borrower through the federal assistance programs that are available. Personal research is also important, but it is vital not to give up and not to put the possibility of foreclosure in the hands of someone who may be a con artist attempting to take advantage of the situation. Reputable legal advice can provide the guidance a struggling homeowner needs to stop foreclosure.
