Foreclosures

Question: If faced with foreclosure, what are my options?Foreclosures....

Answer: Talk with your lender immediately.  The lender may be able to arrange a repayment plan or the temporary reduction or suspension of your payment, particularly if your income has dropped substantially or expenses have shot up beyond your control.

You also may be able to refinance the debt or extend the term of your mortgage loan.  In almost every case, you will likely be able to work out some kind of deal that will avert foreclosure.  If you have mortgage insurance, the insurer may also be interested in helping you.  The company can temporarily pay the mortgage until you get back on your feet and are able to repay their loan.  If your money problems are long term, the lender may suggest that you sell the property, which will allow you to avoid foreclosure and protect your credit record.

As a last resort, you could consider a deed-in-lieu of foreclosure.  This is where you voluntarily "give back" your property to the lender.  While this will not save your house, it is not as damaging to your credit rating as a foreclosure.

Question: When do foreclosure proceedings begin?

Answer: Usually after the borrower has missed three consecutive mortgage payments.  The lender will record a notice of default against the property.  And unless the debt is satisfied, the lender will foreclose on the mortgage and proceed to set up a trustee sale, where the property is sold to the highest bidder.

Question: Will I be able to buy again after losing a home to foreclosure?

Answer: It can happen.  But a lot will depend on your circumstances and the mortgage interest rate you are willing to pay.  Generally, most lenders will consider your request for a home loan two to four years after your foreclosure.  Predatory lenders will issue a home mortgage in less time.  But beware - they routinely charge high mortgage interest rates, fees, and penalties for this privilege.  A quality lender will expect you to show that you have cleaned up your credit.  Providing a reasonable explanation about the circumstances that led to the foreclosure - such as exorbitant medical expenses - is also helpful.

Question: How can I protect my home from creditors?

Answer: Check with your state.  It may provide special protection through the filing of a homestead exemption, which exempts some or all of the value of your equity in the homestead - or home that you live in and the land on which it sits - from claims of unsecured creditors.  Whether to file a homestead exemption will depend on your situation.  Contact your county recorder's office for details.
  

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