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How Can I Avoid Mortgage Foreclosure?
by Greg Stanley
Mortgage foreclosure can occur if homeowners, who have taken a VA, conventional
loan, or an FHA insured loan, default on the mortgage payments. Foreclosure can
lead to the lender gaining possession of a borrower's home. If the value of the
home is less than the mortgage amount, the homeowner may have to pay the balance
amount to the lender under a deficiency judgment. Foreclosures have a negative
impact on the credit score of a home owner.
In order to avoid foreclosure, there are several things that a homeowner can do.
These include communicating to the lender one's inability in making payments as
soon as possible and requesting assistance. If necessary, homeowners should back
their communication with relevant financial figures such as expenses and income
from various sources. They should not abandon their premises or they may not
qualify for the assistance.
There are several housing counseling agencies approved by the U.S Department of
Housing and Urban Development; they offer up-to-date information on the various
programs initiated by government and private organizations that are designed to
help homeowners facing the prospects of foreclosure. Housing counseling agencies,
which also provide credit counseling services, provide their services at no cost.
In order to avoid forbearance, homeowners can try and apply for Special Forbearance.
This may lead to a revision of the repayment schedule and in some cases the payment
may either be revised or suspended. A rise in expenditure and a fall in the monthly
income may enable homeowners to qualify for a new monthly plan.
Similarly, mortgage modification may result in extension of the period of repayment
and may open up refinancing options. Homeowners who have undergone a financial
crisis stand to benefit from mortgage modification as they can chart out a more
manageable repayment plan.
Homeowners can also take recourse to a deed-in-lieu of foreclosure. This entails
voluntarily handing over the property to the lender. Such a deed does not hurt a
homeowner's credit rating as much as a foreclosure. A homeowner, who is a defaulter
on payments, and does not qualify for other alternatives, has not been able to sell
the house, and is not in default with respect to other mortgages, qualifies for a
deed-in-lieu of foreclosure.
A homeowner's qualification for any of the above mentioned alternatives is
determined by the lender. However, homeowners should be aware of solutions that
are not genuine. It is highly advisable to take the help of housing counseling
agencies in such matters.
Homeowners in financial difficulties are liable to fall prey to scams such as
equity skimming in which a homeowner is tricked into signing the deed of the
property to another person. There are several counseling agencies that are not
genuine and often charge homeowners for services that can be done for free. It
is imperative that homeowners check the background of the counseling agency
before deciding to go with a particular firm.
Greg Stanley recommends that you visit
Old Merchants Mortgage
for more information on mortgage foreclosure.
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