Homeowners considering their options on how to stop foreclosure in the state of Nebraska should first verse themselves in the laws and statutes applicable to foreclosure in their state. For the most part, lenders in Nebraska commonly use trust deeds as security instruments involving home purchases, and in turn, the state operates under a Title Theory doctrine. Though judicial foreclosure and traditional mortgages are available, most lenders utilize non-judicial foreclosure as a more efficient means of recovering title deeds in fault. However, homeowners that feel their homeownership status may be in jeopardy have several options when it comes to stopping foreclosure under both federal law and statutes specific to foreclosure in the state of Nebraska, found in Chapter 76, Nebraska Statutes.
Communicate Early and Often with Your Lender
The most important aspect of any foreclosure prevention action is to have active line of communication with your lender. Lenders have provisions built into most trust deeds, which offer them the power of sale over a property in default, but the lender is required to give notice. In theory, a completely unresponsive homeowner in default can have their home foreclosed upon in no more than ninety (90) days with power of sale, non-judicial foreclosure proceedings.
If a consumer makes an earnest effort to communicate, a wide body of foreclosure prevention methods is available to them, assuming a lender agrees. Some of the least invasive and rather popular options for struggling homeowners include the following:
- Reasonable forbearance requests, which reduce or forgive payments on a given title deed for a set period of time, with the provision that the money is paid at a later date
- Loan modification arrangements, which may take any number of forms that can reduce payments currently due and potentially change the nature of the loan itself
- Refinancing, which may place a homeowner into a new title deed agreement under more favorable rates and terms
Taking Advantage of Applicable Federal Relief Programs
Amidst a wave of foreclosures across the country, the federal government has responded with several important programs implemented through the U.S. Department of Housing and Urban Development, in order to stem the tide of foreclosures across the nation. The most notable of these programs, which are not necessarily available to every homeowner’s foreclosure case, include the following:
- The HOPE for Homeowners Act: This act grants certain primary residence owners to adjust the terms of their deed of trust or mortgage to more favorable and stable fixed rates, which are backed by the FHA
- The Homeowner Affordability and Stability Plan: This federal program provides certain homeowners an immediate right to obtain lowered payments and interest rates, if they qualify
- The Mortgage Forgiveness and Debt Relief Act of 2007: This federal initiative provides homeowners with relief from the previously taxable income status of certain types of forgiven debt, such as those from refinancing or loan modification in an attempt to prevent foreclosure
Keep in mind that counselors are available from the US Department of HUD to assist any homeowner in retaining their primary residence and giving insight in to potential government assistance that may be available in their specific case.
Using a Short Sale to Stop Foreclosure
Another option to prevent foreclosure, although not keep your home, is what is known as a short sale. Through negotiations beforehand with a lender, a homeowner can attempt to sell their home on the market. If the sale price of the home covers the existing amount owed on a deed of trust with a lender, a homeowner can prevent foreclosure proceedings on their home and end all lender obligations to that home. However, many homeowners cannot realistically sell their home for a value greater than or equal to their outstanding debt obligations with a lender. In these cases, a lender may agree to what is known as a short sale, which allows all proceeds from the sale to cover outstanding debts, and if any debt amount is not covered, the debt is forgiven. Having some form of legal counsel, to help with setting up and negotiating a short sale with your lender, is important and the best chance of this strategy working in your favor.
Using Deed in Lieu of Foreclosure
Similar to a short sale, but less involved, is the option for homeowners simply to return the deed of trust and their rights to a given primary residence in exchange for relief from all outstanding debt obligations. Lenders are attracted to this option, as it does not rely on an outside buyer like a short sale and is much more efficient and cost-effective than even non-judicial foreclosure proceedings, let alone a foreclosure done through the courts.
Bankruptcy as a Method of Foreclosure Prevention
In a rather invasive method, some consumers elect to declare bankruptcy in order to prevent foreclosure. This may or may not allow them to keep their residence, as some states have primary residence exemptions, but more often than not, these exemptions are not sufficiently high enough to allow a consumer to keep their home under Chapter 7. Under Chapter 13, however, homeowners may be able to consolidate all existing debt obligations, which may have hindered the ability to keep up with a home loan agreement, and reduce the principal amount owed on a given primary residence. This method is highly case-specific and has long-term implications, which will require the assistance of an attorney.
Knowing Your Rights and Getting Legal Help with Foreclosure Prevention in Nebraska
The first step to mounting any form of foreclosure prevention strategy requires understanding the rights afforded to homeowners in the state of Nebraska, as well as the provisions and protections build into a given deed of trust agreement between you and your lender. Having legal counsel assist with this process is integral, as well as using federally supported counselors with the Department of Housing and Urban Development.
