Here are tips and facts that most banks and lenders don’t want you to know.  These tips can help you to prevent the foreclosure process from even starting and even stop it once it has started.

If you have been struggling but not missed a payment yet and you know that in the near future you are going to miss or not be able to make a payment you need to contact your bank or lender.   This is the first step you must take and let the bank or lender what your circumstances are.  If you are suffering a particular financial hardship such as a medical situation or a loss of employment.   You should contact your lender or bank and let them know about your situation.  Once you notify them then they can work with you to put a plan together with a monthly payment that you can afford.  Do yourself a favor and don’t delay in notifying them about life and financial changes that will impact your ability to make your monthly payment. If you wait until after the problem has started it will be more difficult to work out a positive solution.

You can always try to ask your bank or lender for a forbearance. This is an option that will allow you to delay payments for a short period of time while you are overcoming your hardship.  This scenario includes an understanding that another mortgage payment option will be used afterward to help you get the mortgage payments current.

You always have the option of asking the lender about a repayment plan and see what they offer.  This option can include the lender agreeing to add a certain amount of the first missed payment to the next two payments.  This option gives you some breathing room while you overcome your situation and get things back on track.  This option typically only works when you are a victim of some type of hardship.

If you have already fallen behind by missing a few payments and have already racked up a few thousand the bank still might allow you to arrange a repayment schedule.  Most of the time with this option the bank will ask you to pay a half down to a third upfront of the amount you are behind.  The next part is they will allow you to then and additional amount monthly until you get the balance paid off.  The worse thing you can do is to ignore the banks phone calls or letters.  If you are heading down the road of foreclosure there are other fees and costs involved and ignoring these problems will only cause the problem to get more expensive.

There are also different loan modification types that may be an option for you.  These are typically designed for people who’s financial condition makes it so they can not afford a payment plan.  With this option the bank will make adjustments the terms of the loan agreement to make it more affordable for the homeowner.  The bank may also lengthen the number of payments, make adjustments to the amortization schedule, or they may lower the interest rate to decrease the monthly payments.

Some banks may be willing to offer you a short term refinance too.  With this option the bank agrees to forgive some of your debt you have accrued and do a fresh refinance of a new loan.  This is beneficial for the bank because it will be more profitable for them to help you with this and get more money in the long run than to foreclose upon you.

A deed in leiu of foreclosure is another option which may work for you.  This option allows you to deed the property back to the bank in exchange for foregiveness for all the obligations under the mortgage.  In the real estate marketplace today this option can be a difficult one because so many property values have fallen. This option should be your last resort because excercising this option will have a negative impact on your credit history. There is one other item to note.  This can be a positive experience if you can convince your lender to report your account as being paid in full.  Also be aware that you may create a taxable consequence because part of the loan was forgiven by the bank. It is possible that the IRS will likely treat the transaction as income and a taxable event even if you actually received no cash.  But the good news is that by selecting this option it may help you to get back on your financial feet sooner.

This entry was posted on Friday, March 20th, 2009 at 10:48 pm and is filed under Foreclosure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.