People facing foreclosure often stick their heads in the sand and try to avoid the situation. As wrong and as ineffective as the tactic is, it is still very, very common. Therefore, people often end up coming to their senses just a little too late to successfully save their home. If you have found yourself in this drastic situation, here are a few tips to help delay the foreclosure. Keep in mind, though, that if you really cannot afford your home or you owe a great deal more than your home is worth, then you should try to get over any emotional attachment you have to the home and cut your losses and move on.
One of the easiest methods for delaying your foreclosure is to apply for a Home Affordable Modification. This program is available on any owner occupied home loan, secured by a 1 to 4 family home, owned or insured by Fannie Mae or Freddie Mac. A lender cannot proceed with foreclosure until you have been evaluated for eligibility for this program. Because lenders are swamped with applications, this evaluation can take months even though the criteria for eligibility are very simple and straightforward. The best advantage of using this delay tactic is that it may actually turn out to be the way to save your home if it turns out that you are eligible for the program.
If your problem is not that you simply don’t have access to any funds that will allow you to catch up your mortgage payments, but simply that you need time to get those funds liquid, you have several options. Examples of this situation might be: You have other property which is under contract and you are waiting for the sale to close so that you have the money to catch up your payments; or maybe you have stock options which you will soon be able to exercise and then sell the stock to get the money you need. In this case, you will have money to work with; you just don’t have it today.
If you know you will have the money, one method of delaying you foreclosure is to begin negotiating for forbearance. Forbearance is when the bank allows you to make extra payments over several months in order to catch up. Again, this agreement may take quite a while to negotiate. Lenders do not really want to foreclose on your home. They lose a lot of money every time they foreclose. Therefore, if they feel you are negotiating in good faith they will delay the foreclosure while you negotiate.
If they won’t voluntarily give you time to negotiate, then you have a more drastic option. You can file a bankruptcy. Once you file a bankruptcy, everything involving your foreclosure is legally put on hold until your bankruptcy hearing. This is what might be considered a “nuclear option” because your credit will be ruined even if you do not go through with the bankruptcy. Of course, your credit is most likely already ruined if you are facing foreclosure.
All of the above options can buy you the time you need IF you have analyzed the situation and determined that keeping your home is the best option.