Consumers facing default or currently in default on their mortgage should consider all available options to stop foreclosure before relinquishing their ownership of a primary residence. The state of New Mexico utilizes a mortgage as the primary instrument of security in real estate lending and exclusively uses judicial foreclosure for primary residences in the event of default on. Per New Mexico law and foreclosure procedures, consumers facing foreclosure have close to four months to resolve a pending foreclosure once a mortgage is in default, and much likely longer if the foreclosure is contested. During the interim period and preferably before, consumers in New Mexico have a wide body of options available to them in order to stop foreclosure.
Keeping Your Home through Negotiations with Lender
The lender of your mortgage should be the first location to consult regarding how to stop an impending foreclosure. It is highly advisable to remain in close communication with a lender as soon as it is apparent your mortgage may be headed for default. Some options available to consumers from lenders, if applicable to their specific mortgage, may include the following options:
- Forbearance requests, which will allow a consumer to make partial payments or forgo making payments on a mortgage for a set period of time, with provisions to pay this amount back at a later date.
- Other versions of loan modification, including loan reinstatement and if financially feasible, loan modification or other forms of refinancing, which may adjust the terms, rates, and principle amount of a given mortgage
Of all available options to stop foreclosure, the aforementioned are probably the best means of reversing a mortgage that is in default, preventing foreclosure, and allowing a consumer to remain in their home.
Keeping Your Home through Federal Government Assistance
There are several existing federal programs still available to assist homeowners struggling to keep their mortgage payments current. By consulting with an HUD counselor and an attorney, a consumer can determine which, if any, of these programs are viable options in their case.
- Homeowner Affordability and Stability Plan, which may assist certain homeowners in obtaining lower rates and payments through refinancing
- HOPE for Homeowners Act, which allows certain mortgage holders to adjust their variable rate mortgages into fixed rate, thirty (30) years mortgages backed by the FHA
- Mortgage Forgiveness Debt Relief Act of 2007, which prevents forgiven debt from becoming taxable income with the IRS, if related to sale or modification of loan of primary residence
Stopping Foreclosure through Sale Short Sale
A short sale, which involves a troubled homeowner selling their home on their own accord, but for an amount less than that owed in a given mortgage. The idea behind a short sale revolves around the ability of homeowners, and most likely their legal counsel, to get a lender to agree to forgive all outstanding mortgage debts in exchange for proceeds from the short sale. This option does not allow a homeowner to remain in their primary residence, nor does the sale bring in capital for future housing, unless the home is sold for more than the outstanding balance of a mortgage loan.
When considering sale or short sales to avoid foreclosure, having an attorney to assist with negotiations is crucial. Depending on the specifics of each troubled mortgage, an attorney may be able to negotiate a reduced settlement on the entire mortgage balance, sell the home, and derive sufficient income from the sale to cover the costs of housing for a consumer. The benefits of a short sale will depend on the existing appraisal value of a home, the actual sale price obtained, and most importantly, the amount currently owed on a mortgage by the homeowner.
Stopping Foreclosure through Deed in lieu of Foreclosure
A homeowner may simply hand over the deed to their home instead of going through foreclosure proceedings, if their lender agrees. This is what is known as a deed in lieu of foreclosure. Again, this does not prevent the loss of one’s home, but it does prevent foreclosure proceedings and the related credit reporting, if negotiated properly beforehand with your lender.
Stopping Foreclosure through Bankruptcy
One final option available to consumers to prevent foreclosure would be the protections afforded by declaring bankruptcy. By making an initial filing for bankruptcy, whether Chapter 13 of Chapter 7, an automatic stay is in place, preventing collections actions by creditors, such as a mortgage lender. Again, this is only temporary, but if a Chapter 13 bankruptcy claim works out, a debtor may be able to retain their home, while benefiting from reduced payments on their mortgage. If even approved for Chapter 7 bankruptcy, consumers will face the liquidation of their assets, including the home unless the value of the home is below certain exemptions allotted for primary residences in the state of New Mexico.
Understanding Your Mortgage Rights Concerning Default and Foreclosure
Though every mortgage possess different terms and conditions, understanding the specific terms and nature of your personal mortgage agreement is important. Built into every mortgage agreements are terms outlining the deadlines and actions relevant to default and foreclosure, which may include options your lender has included as a means of loss mitigation. Any of these terms may prove beneficial to the mortgage holder when attempting to stop foreclosure, and all the information contained therein is crucial to stopping foreclosure actions. Furthermore, the state of New Mexico and the federal government have introduced several helpful pieces of legislation that may assist struggling homeowners with saving their home.
Getting Legal Help Stopping Foreclosure in New Mexico
Though the advertising appears promising, individuals are advised to avoid foreclosure prevention companies at all times, according to the U.S. Department of Housing and Urban Development. The only resources consumers really require are the assistance of a HUD counselor and that of an experienced foreclosure attorney with a dedicated interest in your case. With these two parties supporting your foreclosure prevention actions, the only other active entity present will be your lender, who more often than not will also be working to prevent foreclosure on your home through a lender representative in their loss mitigation department. Arguably, however, the most important asset to any foreclosure prevention action will be an attorney who is abreast of all relevant laws, statutes, and usable information related to mortgage laws and foreclosure statutes in the state of New Mexico.
