Save Your Home from Foreclosure

Posted on June 27th, 2008 by hinson

Adjustable mortgages are the main culprits in the current foreclosure crisis. If these loans had fixed rates, the amount of the mortgages may be decreasing. Adjustable mortgage are loans that started out with low interest rates. Homeowners were paying for homes that they would ordinarily not be qualified for based on their income.

When interest rates began to increase, monthly payments began to increase and the once affordable home became unaffordable for the owners of the homes. This led to negative equity, meaning what was owed on the home was more than what the home was actually worth. This made refinancing home very difficult. In the end the home would be foreclosed on.

Home foreclosures cause a lot of hardship for homeowners. There are many homeowners who would like to ignore a default notice from their bank. It is hard for many to believe that they will lose their homes. Sometimes there are unforeseeable circumstances that cause a homeowner to go into default. This could be job cut backs or lay offs, divorce, military call up, a death, an accident, unemployment, unexpected medical bills and other reasons.

If you want to avoid a foreclosure it is best to think of a particular course of action.

One course of action for home owners who get behind on their mortgage payments is to work out some kind of arrangement with the bank or lender. If the lender or bank will help you, there are a few options available if you want to reinstate your loan. Before a plan of action to save the home from foreclosure begins, the bank or lender will require the homeowner to present financial information to them. The homeowner will probably be required to submit copies of bank statements, tax returns, income statements and other financial papers. They will need to explain to the bank or lender why they fell behind on their payments. After this is done, a hardship package is put together.

It is important for the homeowner to have a detailed hardship package. A hardship package is generally not read by the specialist working out the loan. It is a good idea to have the foreclosure hardship package sent by certified mail. A return receipt should be added as well. This will give you proof that you sent the package and that the other party received it. The other party receiving it has to sign for the package and the signed receipt will be sent back to you by mail.

Sending the package by certified mail and getting a return receipt will keep your hardship package from sitting on someone’s desk and delay the bank from making the decision to work with you.

If it is not possible to work out arrangements with your bank, you may need to hire a realtor to sell the home and get the bank to agree to a short sale. The realtor will evaluate the property to assess the value of the home and then they can let the lender know what the home will sell on the market for. This will help the bank make the decision on whether to agree to the short sale.