In order to stop foreclosure in West Virginia, homeowners need to be aware of all their options, as well as the specific provisions included in their deed of trust or mortgage agreement. These terms, including whether a power of sale clause in included in a deed of trust or mortgage agreement, will determine effectively how much time a homeowner has following default to fight a foreclosure. In West Virginia, the time required to foreclose on a home, if uncontested by the homeowner, takes less than sixty days. For this and other reasons, homeowners should start actions to stop a foreclosure as soon as they realize their existing home loan agreement may be headed into default.
Contact Your Lender Early
Your home loan lender is often the first and best place to check when looking for alternatives to foreclosure. Typically, a lender stands to benefit more from a loan in good standing than from foreclosing on an existing home loan agreement, which makes lenders more apt to provide alternatives to struggling homeowners. The following are some of the more common methods lenders employ to prevent foreclosure on homeowner’s properties, including:
- Forbearance periods, which will allow a homeowner to forgo making payments on an existing home loan for a temporary timeframe, usually no more than several months. The unpaid money is built back into the life of the loan, while homeowners ideally will be able to use the several month reprieve in order to regain their financial footing
- Loan modification, which attempts to adjust an existing home loan in a way that makes meeting payment obligations more manageable for homeowners, both currently and into the future
- Loan refinancing, which takes homeowners out of their existing home loan arrangement and places them into a new one, which will ideally contain better rates, terms, and other factors
Consult with Federal HUD Counselors on Applicable Federal Laws
The federal government, through the U.S. Department of Housing and Urban Development and the FHA, provides struggling homeowners in all states, including West Virginia, with a consummate source of information and counseling in federally sponsored foreclosure crisis counselors. These counselors can direct homeowners to applicable foreclosure prevention options, as well as inform them of their eligibility for certain federal anti-foreclosure initiatives. The following lists a number of the more notable and widespread foreclosure prevention measures taken by the federal government, including:
- The HOPE for Homeowners Act, which provides incentives to lenders to offer homeowners struggling to meet their mortgage loan obligations with loan modification measures, including high interest rate reductions and changing variable rate mortgage loans into fixed rate vehicles
- The Homeowner Affordability and Stability Plan, which provides lenders incentives to offer struggling homeowners refinancing options in lieu of their current high interest, variable rate mortgage loans. The program provides FHA backed fixed rate loans to certain eligible homeowners through their participating lender
- Emergency Economic Stabilization Act of 2008 and the Mortgage Forgiveness and Debt Relief Act of 2007, which give forgiven debt related to mortgages a non-taxable income status with the IRS
Selling Your Home to Prevent Foreclosure
Another applicable measure to prevent foreclosure would be to sell one’s current home that is embroiled in a costly mortgage or deed of trust agreement. Ideally, if a homeowner has sufficient equity built into their home, selling to a third party buyer will cover all outstanding mortgage debts, leaving a homeowner free to find another residence. In most cases, however, homeowners’ debts outweigh the market value of a home, assuming they can even find an interested buyer. In these cases, lenders may offer the following deals:
- A lender may agree to a short sale, where a homeowner does locate a third party buyer willing to purchase the home at a set price, which is less than the homeowner currently owes their lender. The lender agrees to accept all proceeds from the sale, and in exchange, will forgive any unpaid debt left short following the transaction
- A lender may also agree to what is known as a deed in lieu of foreclosure transaction, which will allow a homeowner to turn over the deed or title to their home to their lender, in exchange for the lender cancelling all outstanding debt obligations related to a given property.
Using Bankruptcy to Stop Foreclosure
Another option for homeowners also includes filing for bankruptcy to prevent foreclosure. Every bankruptcy filing, whether approved or not, results in a temporary stall on all creditor collection actions during a period of what is known as an automatic stay. In the long term, the following benefits from filing bankruptcy may be useful to struggling homeowners facing foreclosure, including:
- Chapter 13, which allows a homeowner to reorganize all debts, including their home loan debts, into one manageable monthly payment under the supervision of a bankruptcy trustee. Additionally, during the Chapter 13 process, a debtor may be able to drastically reduce the overall amount owed on a given debt obligation
- Chapter 7, which will allow a homeowner to liquidate their homestead assets and discharge all attached mortgage or deed of trust obligations. Under Chapter 7 law in West Virginia, the homestead exemption is up to $15,000
Getting Legal Help with Preventing Foreclosure in West Virginia
Homeowners facing default or foreclosure in West Virginia should consult with a lawyer before making any permanent decisions regarding their home, mortgage, or deed of trust. An attorney is truly the only source of information that can provide homeowners with all prospective options, while taking in the considerations specific to a given homeowner’s case.
