It is possible to avoid foreclosure by negotiating a loan modification from your bank. A loan modification would include an application that shows paystubs, a review of your credit report, tax returns, and proof of any other income you may have. If the lender approves the loan modification, they may lower the interest rate of the mortgage and the note. They may also take the mortgage arrears and place them to the rear of the current mortgage. Doing so will enable you to reduce your mortgage payments.
Is Bankruptcy An Effective Foreclosure Defense?
Bankruptcy is more than effective as foreclosure defense. Once a bankruptcy is filed, an automatic stay goes into effect immediately to stop a foreclosure. Then if you file a chapter 13 bankruptcy, you can repay the mortgage debts over 36 to 60 months. The chapter 13 plan also needs to be approved by the bankruptcy court.
What Is A Deed In Lieu Of Foreclosure, How Does It Work And Is It A Good Use In The Foreclosure Situation?
The deed in lieu is a good option for foreclosure defense. It’s a legal document that transfers the ownership of the real property to a lender to avoid foreclosure. The deed must be voluntarily signed over by the borrower and the terms of the deed in lieu must be agreed upon by both parties. A deed in lieu of foreclosure can be a strong choice for avoiding bankruptcy. You should have an attorney to negotiate a deed in lieu of foreclosure because the lender may or may not alleviate a deficiency balance. You will want to ensure the application and negotiation pays other liens and alleviates a mortgage deficiency.
Deeds in lieu may not work well when there are junior liens. For example, if there’s a homeowners association lien, the lender may not be able to accept a deed in lieu. If there’s a second mortgage, then a deed in lieu will not be available unless the homeowner can pay off the second mortgage or negotiate with the second lender at the same time.
How Can A Foreclosure Defense Attorney Help Me In These Situations?
A foreclosure defense attorney can help you in multiple ways. A foreclosure defense attorney can provide support in reinstating a mortgage. You may also need an attorney to obtain your payoff balance and your reinstatement figures during the foreclosure process. A foreclosure defense attorney can also advise you regarding all your options. Including reviewing chapter 13 bankruptcy as an option, filing the loan modification documents, or the deed in lieu process. All those options should be discussed with your foreclosure defense attorney so that you are aware of all options available to you and have the tools to delay the foreclosure process.
A foreclosure defense attorney can also help you with filing the request for mediation, documentation, and submitting documents to the court in a timely manner.