Overview of Strategies to Fight Foreclosure
Facing the prospect of a foreclosure is both a legally and emotionally challenging situation. An important element of dealing with a foreclosure involves making sound, proactive decisions to protect your rights and interests. Maintaining some semblance of control over the process is possible. Employing certain strategies provides the potential to stop a foreclosure or at least slow the process to permit you to examine your alternatives.
Loan Modification
One strategy to pursue in fighting foreclosure is to seek a loan modification. A loan modification accomplishes a number of objectives, all of which are designed to stop a foreclosure and even permit you to retain ownership of the property.
Through a loan modification, your loan balance is brought current by operation of a new agreement between you and the lender. Additionally, the monthly payments typically are reduced to better ensure that you make future payments in a timely manner.
A lender entertains a loan modification because it saves time and money, compared with a time-consuming and costly foreclosure case.
Short Sale
You can also choose to pursue a short sale in order to prevent or stop foreclosure. A short sale is particularly useful if you are "underwater" with regard to your mortgage loan. "Underwater" means the value of the property is less than the outstanding balance on your loans on the property.
The short sale process includes a commitment from the mortgage lender to renegotiate a lower outstanding balance on the loan. The reduction permits you the ability to put the property on the market at a more favorable price. A lender considers a discounted loan to permit a short sale because it saves money otherwise expended through the foreclosure process.
Bankruptcy
The U.S. Bankruptcy Code provides protections against foreclosure. Filing for bankruptcy results in the issuance of an automatic stay order from the bankruptcy court. The automatic stay order requires the mortgage lender to stop pursuing a foreclosure absent a further order of the bankruptcy court permitting further action.
Through bankruptcy, you possess the ability to enter into a reaffirmation agreement with the mortgage lender. A reaffirmation is something like to a loan modification. New terms and conditions for the mortgage loan are negotiated under the oversight of the bankruptcy court trustee, the court official who monitors your case on a day-to-day basis.
Legal Representation
A useful resource in fighting foreclosure is retaining legal representation. Both local and state bar associations maintain directories of attorneys in different practice areas, including real estate and foreclosure. Contact information for these organizations is available through the American Bar Association:
American Bar Association
321 N. Clark St.
Chicago, IL 60654-7598
312-988-5000
abanet.org
Tags: loan modification, bankruptcy court, mortgage lender, stop foreclosure, American Association, automatic stay
