In order to stop foreclosure effectively in the state of North Dakota, homeowners need to arm themselves with information relevant to their specific mortgage agreement, foreclosure statutes applicable to North Dakota, and federal laws governing foreclosure and foreclosure relief. Primary residence liens provisions are attached to mortgages in North Dakota, with judicial foreclosure being the only method of foreclosure in the state. This process, if uncontested by the homeowner, can take place in less than ninety days. In the paragraphs beneath there are several options and suggestions for struggling homeowners facing foreclosure in North Dakota.
Communicate with Your Lender Early and Often
Any relief regarding mortgage payments and other considerations will have to come directly from your lender. By remaining in contact with your mortgage lender from the onset of default, and preferably well before, a homeowner can open up to themselves one or more of the following options to prevent foreclosure, including:
- Forbearance requests: Forbearance on mortgage payments will allow a homeowner to miss or make partial payments on a given mortgage for a predetermined period, which should help the homeowner recover some financial stability to meet and make future payments. The unpaid money during the forbearance period is then added onto the total amount owed on a mortgage and repaid over the lifetime of the loan
- Loan modification: Loan modification can do one or more adjustments to an existing mortgage, which may make payments more manageable to homeowners in the near future, as well as in the long term. This can include rate adjustments, turning a variable rate mortgage into a fixed rate, or others
- Loan refinancing: Through loan refinancing, a homeowner can enter into an entirely new mortgage with more favorable terms, rates, and a lower principal amount owed potentially
Look into Government Programs and Federal Housing Initiatives
The federal government, through their local offices of the Department of Housing and Urban Development, offers relief to homeowners through counseling and insight into existing federal laws and other programs that may help prevent foreclosure. The more notable of these initiatives and laws, include:
- The HOPE for Homeowners Act: This Act provides FHA backed fixed rate, thirty-year mortgages through your participating lender to eligible homeowners, who are currently struggling to make payments under a variable rate mortgage
- The Homeowner Affordability and Stability Act: This Act, among other considerations for struggling homeowners, gives eligible homeowners facing foreclosure the option to adjust their existing mortgage agreement to more favorable terms through modifications
- The Mortgage Forgiveness Debt Relief Act of 2007, extended into 2012 through the Emergency Economic Stabilization Act of 2008, provides tax breaks to homeowners that have foreclosure related debts forgiven by their lenders, which prior to these acts, would have become taxable income with the IRS
Consider Short Sales or Deed in Lieu of Foreclosure
In some cases, retaining one’s primary residence is not feasible, but avoiding the losses associated with foreclosure itself is possible. Two options, short sale or deed in lieu of foreclosure, allow homeowners to alleviate all outstanding debt related to a given primary residence mortgage agreement, in exchange for the sale of their home.
- Short Sale: A homeowner can locate a buyer for their home, and if approved by their lender, sell their existing property for a set price, which may be less than the total amount owed on an existing mortgage agreement. In a pre-arranged short sale, the lender will then forgive the amount “short” of the total amount owed. In cases where the value of the home exceeds the total amount owed on a given mortgage, a homeowner can consider a simply selling their home and downsizing into a less expensive residence, as well.
- Deed in lieu of foreclosure: This allows a homeowner to simply turn over the deed to their home to the lender in exchange for forgiving all outstanding debts related to a given primary residence. In the case of deed in lieu of foreclosure, a homeowner will not be tasked with having to locate a buyer, which they may never actually find.
Look into Your Options with Bankruptcy
If an impending foreclosure is part of a larger debt problem, you may consider bankruptcy as a means of avoiding foreclosure. In the short term, any filing for bankruptcy will put an automatic stay on all creditor claims and collection attempts, which can stop foreclosure temporarily. In the long term, the following chapters of bankruptcy offer these benefits to a struggling homeowner:
- Chapter 7: By liquidating all one’s assets in exchange for discharge, a homeowner can effectively discharge their mortgage debts in exchange for turning their home and other assets over to the trustee for sale. In North Dakota, the homestead exemptions applicable to Chapter 7 stand at $80,000, which may allow certain homeowners to remain in their home. Federal exemptions for Chapter 7 are significantly less regarding homesteads and real estate property.
- Chapter 13: Reorganizing may allow certain homeowners to consolidate all existing debts, which might have detracted from making mortgage payments , while potentially negotiating existing debts into much smaller principal sums, including a mortgage on their primary residence
Getting Legal Help to Stop Foreclosure in North Dakota
A complete strategy to stop a foreclosure requires the assistance of several key players in any state, including North Dakota. This will include direct counsel from an attorney with experience in fighting foreclosure cases, government assistance through an FHA counselor, and help from your lender, or at the very least, negotiating and working with your lender’s loss mitigation department. Consult with an attorney before making any decisions regarding how to address your impending foreclosure concerns, and if possible, well before you enter into default with your existing mortgage.
