In foreclosure, a lender can repossess and sell a borrower’s home when that person defaults on a loan. The proceeds of the sale are used to pay the loan, and the home’s new buyer does not have to deal with a mortgage. If the sale price is insufficient to pay the loan, the borrower may be responsible for the balance. Foreclosures are costly and time-consuming for lenders, and in most cases, lenders are motivated to ensure that mortgages are paid on time. In this article, you will learn about some of your options if you’re facing foreclosure.
Keeping Your House
Every state handles foreclosure differently, but the results are the same; borrowers lose all claim to their homes. If you are able to stop the foreclosure, there are several ways to retain control of your property. Before the bank puts your home up for sale, you can pay the loan’s full balance, or get caught up on missed payments.
However, borrowers in foreclosure are there for various reasons, and most do not have the financial wherewithal to pay off a mortgage. In these cases, borrowers can use forbearance to keep their homes. Suspension of mortgage payments can allow an unemployed borrower to stay in his or her home, but it will not eliminate the principal or any penalties. A final option is a loan modification, where you, your Foreclosure Lawyer and your lender can change the terms of the mortgage to make it more manageable.
Giving up Your Home
In certain cases, such as if the amount owed on the mortgage exceeds the home’s value, a borrower may not want to remain in the home. If you know you can never pay your mortgage, signing the home over to the lender can encourage them to stop the foreclosure and allow you to walk away.
Avoiding Default Judgment
Walking away can allow you to get a fresh start, but it can leave you vulnerable to a deficiency judgment. Borrowers unfamiliar with foreclosure laws, or those who haven’t hired Brent Sorenson & Associates P.C. are especially at risk. Deficiency judgments leave borrowers responsible for the mortgage balance, even after foreclosure and sale. By hiring a Foreclosure Lawyer, you can usually get the lender to waive its right to such a judgment.