In order to stop foreclosure in the state of Oklahoma, a homeowner needs to be informed about the specific provisions and clauses included in their mortgage or deed of trust. Lenders in the state of Oklahoma secure property liens with either instrument, and depending on the specific clauses included in each, lenders in Oklahoma can pursue either power of sale, non-judicial foreclosure actions or pursue a judicial foreclosure. Once the detailed provisions of an existing mortgage agreement or deed of trust are determined, a homeowner struggling to meet their financial obligations to an existing property lien can determine if any of the follow methods may be helpful in stopping an impending foreclosure action on their home.
Consult with Your Lender before Default Occurs
Homeowners should stay in close contact with their lender, or their lender’s loss mitigation department, which will be the entity responsible for approving a number of foreclosure prevention actions noted below. Some options that are commonly offered by lenders, if approved by your lender include the following:
- Forbearance, which if requested and approved, gives homeowners a temporary reprieve from making any or full payments on an existing property loan, with the lender building the unpaid amounts back into the total amount of the loan. Forbearance periods typically last anywhere from a month to several months, depending on what you and your lender agree to, and ideally allow a homeowner to regain financial stability to make future payments.
- Loan modification, which can take the form of any number of adjustments to an existing property loan agreement and ultimately will help homeowners lower their monthly payments owed.
- Loan refinancing, which allows homeowners to enter into an entirely new mortgage loan, which preferably will offer better terms, interest rates, and if applicable, a lower principle amount owed.
Any of these options are subject to the rates and terms an existing lender, or outside lender, is willing to offer to a struggling homeowner. Additionally, a homeowner’s eligibility for any of these options will widely vary by lender, who will be much more likely to assist a homeowner that is actively consulting with the lender regarding their foreclosure prevention options.
Check with HUD Counselors and other Federal Foreclosure Relief Programs
The federal government, through local offices of the Department of Housing and Urban Development and the FHA, offers free foreclosure prevention counseling, which may be able to direct homeowners into federal relief laws applicable to their personal foreclosure prevention actions. The most notable laws on the books currently that address foreclosure prevention for homeowners include:
- The Mortgage Forgiveness and Debt Relief Act of 2007, extended with the Emergency Economic Stabilization Act of 2008, which allots tax breaks for homeowners discharging forgiven debts related to a mortgage through the year 2012.
- The HOPE for Homeowners Act, which provides FHA-backed, fixed-rate, thirty year mortgage loans through your lender for eligible homeowners struggling to meet obligations related to a variable rate mortgage
- The Homeowner Affordability and Stability Act, which provides government assistance to homeowners struggling to meet existing mortgage or deed of trust provisions through offering loan modifications with certain participating lenders
In order to determine eligibility and if any current federal relief laws are beneficial to your foreclosure prevention actions, consult with both an attorney in your state, as well as the FHA and HUD counselors in your state before you are facing default and foreclosure.
Consider Short Sales or Deed in Lieu of Foreclosure
Depending on the extent of existing debt obligations and the homeowner’s ability to pay in the near future, as well as long term, unloading a property saddled with mortgage debt is sometimes the best option. If a homeowner can sell their existing home at a price that exceeds the total amount owed on an existing mortgage or deed of trust agreement, consider doing it. If not, which is often the case, consider the fact that some lenders are willing to negotiate with homeowners unable to sell their home for a value in excess of the total amount owed, sometimes well below that amount.
- Short sales occur when a lender agrees to a third party buyer purchasing a given property in default for a fixed price, which is less than the total amount owed by the current homeowner. In exchange for the rapid sale, the lender will forgive the amount short from the third party purchase, and if done correctly, will agree to forgive future debt claims related to a property. Having an attorney negotiate the details of a short sale beforehand is essential.
- Deed in lieu of foreclosure is another option that allows a homeowner to hand over the property they currently own to their lender in exchange for the lender forgiving or cancelling all outstanding debt obligations related to that property. This method will not entail finding a third party buyer, which is one less variable a homeowner will need to consider.
Look into Bankruptcy Filing Protections and Exemptions
Some homeowners, generally in response to an overall debt crisis including their home, consider bankruptcy as a means of preventing foreclosure. The two applicable chapters of bankruptcy used by homeowners to stop foreclosure are Chapter 13 and Chapter 7.
- Chapter 13, which allows a reorganization of debts under the supervision of a bankruptcy trustee, will immediately put an automatic stay on creditor collection attempts, including foreclosure actions. Further down the line, an attorney representing your Chapter 13 case can renegotiate all debts owed to creditors, which are then consolidated by your bankruptcy trustee into a manageable monthly payment based on your current income earning capacity. If the terms of the reorganization are met, a homeowner can retain their residence, often at a renegotiated amount owed, which is far less than the previous debt.
- Chapter 7, which will allow discharge of most debt obligations and force the liquidation of all assets. Normally, the liquidation and discharge process will liquidate any home asset owned by a debtor, while forgiving any existing debt related to that homestead. Under Chapter 7 laws, however, exemptions exist, which in the state of Oklahoma are extremely generous. Consult with an attorney to determine if your home or homestead is exempt under Chapter 7 exemptions specific to the state of Oklahoma.
Getting Legal Help to Stop a Foreclosure in Oklahoma
All the aforementioned options will most likely require or benefit from the intervention of an attorney. The process of preventing a foreclosure may take on a multifaceted approach involving a number of entities, including lenders, government counselors, your legal counsel, and if applicable, third party buyers. All of these arrangements will require a homeowner to protect their legal interests, as well as gather the requisite information to make informed decisions, through the use an experienced foreclosure prevention lawyer in Oklahoma.
