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Ways to Stop Foreclosure

We have proven ways to Stop Foreclosure that will allow you to sleep at night. It all begins with our "Forensic Mortgage Solution". (click on link for more information)

A Dozen Ways to Stop Foreclosure

The means to stopping foreclosure starts with the timing of the initial action taken by the debtor(you). The most common cause of losing your home results from waiting too long to answer a foreclosure notice or not responding at all. Contrary to common wisdom, there are dozens of ways to stop foreclosure.

As the foreclosure auction date comes closer, options continually become unavailable until only a bankruptcy or walking away remains. Below you will find many of the most common methods to avoid foreclosure. Most ways to stop a foreclosure have been categorized in main groups and sub-groups below:

Full Re-instatement

One of the best and easiest ways to stop foreclosure is to find out how much arrearage is owed and pay it in full. If you could do this you probably wouldn’t be reading this, but just in case, know it exists as an option. In fact, most state laws grant the home owner the absolute right to re-instate before the foreclosure and require that the bank accept the full re-instatement and stop the foreclosure. Unless a creditor gives you a hard time, you should not need outside help on this option.

Full Payoff Refinance

Take out a new mortgage to pay off the balance on the old mortgage including arrearage and legal fees. This happens to be one of the ways to stop foreclosure that occurs more often then one might think. If you have enough equity in the home, bad credit is not an obstacle for getting a new loan.

Foreclosure Workouts

A foreclosure workout is any arrangement negotiated between the creditor and you outside of the original terms of the loan. This method allows both parties to make the most of a bad situation and therefore it’s favored over the other options when possible. Most creditor are not as inclined to choose this option as one might expect. Our "Forensic Mortgage Solution" makes it more likely that a creditor will choose this option. A foreclosure workout on property may take one of the following ways to stop foreclosure:

1. Short pay or Short refinance.

In most situations people accomplish this through a refinance of the property facing foreclosure. Example: The debtor owes $250,000 on their mortgage with another $25,000 in arrearage and legal fees. Someone negotiates for the loan to be settled for $180,000 and arranges a new loan for $192,000 to cover paying off the original creditor and all related transaction fees. You have now avoided foreclosure and reduce your debt by $83,000. Occasionally a relative, friend or investor buys or pays off the mortgage from the creditor. Another way to make this work is to negotiate as summarized above but instead of finding a foreclosure loan to cover both the settlement and the legal fees find the best loan deal available to you and have family or friends make up the difference.

2. Modify the existing mortgage.

In simple terms, the creditor, usually a bank, agrees to change the terms of the loan. Most often these changes are temporary. Reducing the interest rate, principal portions of payments, or extending the amortization in an effort to reduce overall payment obligations, remain the changes most creditors find agreeable. Unless the delinquency remains small with a loan at a local bank or the debtor has a nasty hardship under a government program this can be a tough plan to get through the creditor’s guidelines. Often a professional foreclosure negotiator can get these plans approved even when you cannot. If handled correctly, such as using our "Forensic Mortgage Solution"; this can be one of the best ways to stop foreclosure.

3. Repayment plan.

You pay a portion of the arrearage and agree to pay the rest in addition to the regular payment over a period of months. With proof of the income and the proper down payment, most creditors will accept this type of plan all day. Expect for half of the arrearage plus legal fees to be paid up front with a promise to pay the rest of the arrearage in addition to the regular payment within six months. Plans with less down and paid over a longer period of time can be negotiated by loss mitigation professionals.

4. Deed in lieu of foreclosure.

You give the property back to the creditor usually, but not always; in exchange for their forgiveness of potential deficiencies. This does not happen without real negotiation by you or a foreclosure professional. Even if you give the home back or the bank takes it at a foreclosure auction you may owe the deficiency. This is the difference between what the house sold for at the foreclosure auction and what you owe including the legal fees. While the deficiency can be settled without paying any of it, this must be agreed to and most certainly does not happen automatically in most states.

5. Short Sale.

Your home is sold to a third party; the creditor accepts this price as full settlement of the debt if it is negotiated that way. BEWARE: The banks often attempt to take a short sale and ask for a deficiency too. In cases where you have many other assets there may be no way out of the foreclosure deficiency without using our "Forensic Mortgage Solution".

6. Non-Adversarial Foreclosure.

The creditor or accommodating third party that has bought the mortgage sells the property at foreclosure to clean the title of other lien holders. Later the property sells back to you or another predetermined entity.

7. Repurchase after foreclosure.

You buy back a foreclosed property after the auction.

8. Forbearance.

In exchange for money or you taking some other action (perhaps listing the property with a realtor or making repairs) the creditor agrees to provisionally cease legal actions.

9. Informal Forbearance.

One of the more unusual ways to stop foreclosure is a form of forbearance that is generally informal. A property owner, usually with investment property, cannot pay the mortgage. The creditor does not want to take title, probably because of environmental, management or other liabilities. The property owner keeps title and “manages” the property until one party or the other can implement another option.

Bankruptcy

Perhaps one of the worst ways to stop foreclosure is filing for Chapter 7 or Chapter 13 bankruptcy protection. Although at times this may prove to be the best course for you to retain your home and deal with your creditors. The advantages of bankruptcy include the ability to stop foreclosure without creditor acceptance and encompassing more than just the mortgage debt; such as credit cards, with a single action. If bankruptcy emerges as a recommendation, your personal circumstances must be well suited for this option. In most cases bankruptcy comes as a last resort. While you may file bankruptcy on your own, you will almost always be better served to hire a qualified, experienced bankruptcy attorney.

In Chapter 7 all nonexempt assets are turned over to the bankruptcy trustee and debts discharged. Exemptions vary by state. In most cases the debtors possess so few assets that they may keep everything and have all of their debts wiped out completely. If a chapter 7 will not produce this result it may not be the best option. Chapter 13 a plan is outlined prescribing how you will pay creditors over a three to five year period. Only a Chapter 13 can stop a creditor from foreclosing on a delinquent debtor over a period of years. Under a Chapter 13 the court retains the right to scrutinize finances of the debtor for the life of the reorganization plan. For a Chapter 13 to work payments under the plan must be kept up or the court protection will evaporate and the house will go to foreclosure. This is generally one of the worst ways to stop foreclosure.

Give Up the Property

Too often people refuse to examine this as one of the ways to stop foreclosure. The problem may be that you cannot afford to stay where you are. If you will not be able to keep the house in the long run it may not be advisable to throw a lot of money into a futile effort to save it from foreclosure just for the short run. Any cash available may serve you better if put towards a new place to live. If you owe more than the house is worth, look at a short-sale or deed in lieu of foreclosure as described above. If a deed in lieu of foreclosure is out of the question compare allowing the foreclosure vs. bankruptcy.

Terms can be negotiated with the creditor for you to stay in the house as long as possible before moving. Where you have equity in the house, try to arrange preserving it by selling it prior to foreclosure. In some cases other equity preservation strategies may be used when foreclosure cannot be avoided.


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