How to Stop a Foreclosure in New Hampshire

In order to stop foreclosure in New Hampshire, homeowners need to act as soon as they realize their inability to meet financial obligations related to a deed of trust agreement. New Hampshire is a title theory state, mainly facilitating foreclosures through power of sale provisions noted in a deed of trust, which would fall under the non-judicial category of foreclosure proceedings. In New Hampshire, an entirely uncontested foreclosure can process as swiftly as sixty (60) days. However, homeowners actively advocating their foreclosure prevention actions can prevent this entirely, or delay until a more favorable option becomes available. The first step to doing this is understanding your legal rights and options when it comes to stopping foreclosure in the state of New Hampshire.

Dealing Directly with Lenders

The first line to preventing foreclosure is dealing directly with your lender, albeit possibly with the assistance of legal counsel. Contrary to popular belief or sentiment of foreclosure candidates, your lender is the most likely source of relief from impending foreclosure, since in the state of New Hampshire, they are the beneficiary of the title in the event of default.  Depending on how a lender is approached and the specific factors surrounding your mortgage, any of the following options may be at a homeowner’s disposal, including:

• Loan modifications: Loan modifications can entail any number of adjustments to an existing loan agreement, which ultimately may make payments more manageable for a homeowner

• Loan refinancing:  Loan refinancing may allow a homeowner to reduce the principal amount owed on a loan, enter them into a lower rate, adjust to a fixed rate, and ultimately, make payments more manageable

• Forbearance:  Forbearance requests, if approved by a lender, will allow a homeowner to make partial payment or forgo making payments temporarily to achieve stability, with the addition of unpaid amounts having to be repaid later in the life of the loan

Using a Short Sale or Deed in Lieu of Foreclosure

Homeowners that want to avoid foreclosure, but are not averse to losing their home, or have no other options available to them, may consider either a short sale or deed in lieu of foreclosure with their lender. In both cases, having an attorney available to negotiate the ability to do either of these items is highly advisable, but here is how both essentially work:

• Deed in Lieu of Foreclosure:  Assuming the outstanding debts owed pertaining to a given mortgage is somewhat comparable to the actual value of a home, a homeowner may be able to undergo a deed in lieu of foreclosure exchange, in which the beneficiary of the deed of trust, the lender, will retain their rights to the property in exchange for forgiving all outstanding debt obligations related to a given property. 

• Short sale:  This method requires a potential buyer to the home in most cases, which can offer a proposed bid on the piece of property in question. Normally, a homeowner will simply sell their home on their own accord, but with the previously agreed upon condition that the proceeds to the sale will go to the lender, and any debt amount not covered by the sale will be forgiven.  Again, this requires some negotiating skill and will need cooperation between a lender and a homeowner, as well as a third party buyer, which makes this method slightly harder than deed in lieu in most cases.

Taking Advantage of Federal HUD Counselors and Applicable Federal Programs

The federal government, through the US Department of Housing and Urban Development, offers free counseling and guidance to homeowners regarding properties that are in jeopardy of foreclosure.  These counselors are excellent resources for ongoing federal programs that may assist a homeowner, as well as regarding the state specific foreclosure laws applicable to the state of New Hampshire. Some of the most notable and recent pieces of legislation approved concerning foreclosure and helping American homeowners, which may be applicable to your case, include the following:

• The HOPE for Homeowners Act:  This federal act allots certain mortgage holders the ability to refinance their existing mortgage into a federally backed loan with their lender at a fixed rate for a term of thirty (30) years

• The Mortgage Forgiveness and Debt Relief Act of 2007, which if applicable, will prevent forgiven debt from short sales, negotiations, and other foreclosure prevention options from becoming taxable income per IRS regulations, if related to a primary residence

• The Homeowner Affordability and Stability Plan, which helps eligible consumers with their existing mortgages through assistance with refinancing and rate adjustments, if helpful

Bankruptcy and How to Stop Foreclosure

One of the final options for stopping foreclosure is through bankruptcy. For starters, bankruptcy laws require that filings be based on need, specifically Chapter 7 filings, and the means test is subject to the approval of a bankruptcy judge. However, simply filing for bankruptcy, which would be either Chapter 13 or Chapter 7 in the case of foreclosure prevention, will put an automatic stay on all credit collections attempts , which will effectively stop the foreclosure process until the bankruptcy proceedings are figured out.  Aside from automatic stay, the following options may assist consumers in stopping foreclosure through bankruptcy:

• Under Chapter 7 bankruptcy, if approved, a consumer can alleviate most debts, including home mortgages, while liquidating all assets. In the state of New Hampshire, there is a $100,000 exemption allotted for primary residences, which means homes with a value of less than $100,000 are exempt from liquidation in Chapter 7 in New Hampshire.

• Under Chapter 13, the reorganization process takes a relatively long time in certain cases, which buys homeowners more time in their home, while most likely not paying anything further on their existing mortgage. Secondly, the reorganization overseen by a trustee could possibly, and ideally, reduce the overall amount of money owed to creditors, both real estate property lenders and other creditors, who may take away from one’s ability to pay a mortgage obligation. 

The Importance of Getting Legal Help

In New Hampshire, as across the country, companies and other entities have preyed on homeowners seeking relief from their impending foreclosure.  By consulting with a HUD counselor, an attorney, and your lender, a homeowner can retain all of the guidance, assistance, and other help they need to combat an impending foreclosure proceeding effectively. In virtually all of the aforementioned methods to stop foreclosure, the intervention of an attorney will prove extremely useful, and in others, such as bankruptcy, may be required by law.  In any case, being armed with all available and applicable information pertinent to foreclosure, both federal and specific to the state of New Hampshire, can a homeowner garner a favorable outcome in any foreclosure prevention action.