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I Can’t Pay My Mortgage Loan — Is Foreclosure Inevitable?

Foreclosure is a scary word for homeowners, yet as many people face job layoffs and struggle through a competitive job market, it can quickly become a part of their vocabulary.

When U.S. foreclosure activity increased by a whopping 81 percent in 2008, foreclosure talk was headline news. Some mortgage lenders couldn’t handle their inventory of bank-owed properties, and in an effort to slow the number of foreclosures, lenders introduced hardship provisions to help borrowers avoid eviction. But even with provisions in place to help struggling homeowners with mortgage payments, foreclosure filings for the first six months of 2012 were up two percent from the previous year, according to RealtyTrac.

What Is Foreclosure?

A foreclosure is a legal procedure where a mortgage lender or other lien holder takes possession of a real estate property due to non-payment of the debt. The reason behind a mortgage delinquency varies, but often revolves around some type of financial hardship.

For example, you or your spouse could unexpectedly lose a job and become a single-income household — not a problem if one person earns enough to support the family, but if you needed both incomes to keep up on your home loan, a drop in income can interfere with your ability to pay, and you may feel that a foreclosure in inevitable. However, don’t fear yet; a missed payment or two isn’t the kiss of death.

What Happens If I Stop Paying My Mortgage?

If you fall behind on your home loan payment, it’s normal to think the worst. You might panic each time the doorbell rings and fear that you’ll be greeted by a sheriff with eviction papers. However, it can take up to 12 months before a lender forces your eviction, and long before the situation gets to this point, you’ll have an opportunity to bring the mortgage current.

So, what happens when you foreclose?

Understand that mortgage lenders don’t foreclose the moment you default on your mortgage loan — the process is much slower. If you don’t make a payment within your grace period, your lender will send a late notification and charge a late fee. If your lender does not receive a payment within 30 days, the delinquency is then reported to the credit bureaus — but this doesn’t start the foreclosure process.

A notice of default isn’t sent until you’re 90 days past due, in which case the lender’s foreclosure department receives your file. You’re then given an additional 90 days to settle your past due balance — more than six months after your first missed payment.

Stop Paying Mortgage: Is Foreclosure Inevitable?

When you can’t pay your home loan payment for several months, you might throw in the towel and wait for your lender to act. In your mind, the foreclosure is inevitable. Why fight what I can’t change? Rather than prematurely conclude that a foreclosure is unavoidable, learn your options.

Your mortgage lender doesn’t want to deal with a foreclosure. It’s a costly process, plus it can take months to resell the property. It’s much simpler and cost-effective for you to retain ownership of the house. If you need help with mortgage payments, and you want to save your house, the time to act is before your lender forecloses.

  • Forbearance: Before you decide that a foreclosure is inevitable, talk to your mortgage lender to see if you qualify for forbearance. This option offered by lenders is one way to stay in your home and avoid foreclosure. If eligible, your lender suspends your monthly payment on a temporary basis, or reduces your mortgage payment. Perfect if you’ve lost a job and can’t afford your mortgage. This provision gives you time to find new employment and get your finances back on track.
  • Mortgage modification. Another option to help with mortgage payments, this provision can completely erase your foreclosure fears. A mortgage modification can help if you’re ineligible for a refinance and experience a long-term hardship. If eligible, your lender modifies or changes the original terms of your home loan, such as the interest rate or the monthly payment. This reduces your monthly mortgage payment to an affordable amount.
  • Repayment plan. Maybe a short-term hardship triggered your delinquency, yet you don’t have the bankroll to settle your past due balance. If you can now afford your mortgage payment, talk to your lender about a repayment plan. This provision lets you pay the past due balance over time. The lender adds a little extra to your current mortgage payment until you’ve paid the past due amount.
  • Deed-in-lieu of foreclosure. But what if you’re already in foreclosure and have few options? In this case, a foreclosure may seem inevitable, but don’t give up too quickly. In this case, you might be a good candidate for a deed-in-lieu of foreclosure, in which you voluntarily transfer ownership of the property to your mortgage lender. This option releases your mortgage obligation. And while you don’t escape credit damage, you can repair your credit quicker than if you had went through a mortgage foreclosure.

Article source: http://www.gobankingrates.com/mortgage-rates/cant-pay-mortgage-loan-foreclosure-invetibale/

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I Can’t Pay My Mortgage Loan — Is Foreclosure Inevitable?

What happens if I stop paying my mortgage?Foreclosure is a scary word for homeowners, yet as many people face job layoffs and struggle through a competitive job market, it can quickly become a part of their vocabulary.

When U.S. foreclosure activity increased by a whopping 81 percent in 2008, foreclosure talk was headline news. Some mortgage lenders couldn’t handle their inventory of bank-owed properties, and in an effort to slow the number of foreclosures, lenders introduced hardship provisions to help borrowers avoid eviction. But even with provisions in place to help struggling homeowners with mortgage payments, foreclosure filings for the first six months of 2012 were up two percent from the previous year, according to RealtyTrac.

What Is Foreclosure?

A foreclosure is a legal procedure where a mortgage lender or other lien holder takes possession of a real estate property due to non-payment of the debt. The reason behind a mortgage delinquency varies, but often revolves around some type of financial hardship.

For example, you or your spouse could unexpectedly lose a job and become a single-income household — not a problem if one person earns enough to support the family, but if you needed both incomes to keep up on your home loan, a drop in income can interfere with your ability to pay, and you may feel that a foreclosure in inevitable. However, don’t fear yet; a missed payment or two isn’t the kiss of death.

What Happens If I Stop Paying My Mortgage?

If you fall behind on your home loan payment, it’s normal to think the worst. You might panic each time the doorbell rings and fear that you’ll be greeted by a sheriff with eviction papers. However, it can take up to 12 months before a lender forces your eviction, and long before the situation gets to this point, you’ll have an opportunity to bring the mortgage current.

So, what happens when you foreclose?

Understand that mortgage lenders don’t foreclose the moment you default on your mortgage loan — the process is much slower. If you don’t make a payment within your grace period, your lender will send a late notification and charge a late fee. If your lender does not receive a payment within 30 days, the delinquency is then reported to the credit bureaus — but this doesn’t start the foreclosure process.

A notice of default isn’t sent until you’re 90 days past due, in which case the lender’s foreclosure department receives your file. You’re then given an additional 90 days to settle your past due balance — more than six months after your first missed payment.

Stop Paying Mortgage: Is Foreclosure Inevitable?

When you can’t pay your home loan payment for several months, you might throw in the towel and wait for your lender to act. In your mind, the foreclosure is inevitable. Why fight what I can’t change? Rather than prematurely conclude that a foreclosure is unavoidable, learn your options.

Your mortgage lender doesn’t want to deal with a foreclosure. It’s a costly process, plus it can take months to resell the property. It’s much simpler and cost-effective for you to retain ownership of the house. If you need help with mortgage payments, and you want to save your house, the time to act is before your lender forecloses.

  • Forbearance: Before you decide that a foreclosure is inevitable, talk to your mortgage lender to see if you qualify for forbearance. This option offered by lenders is one way to stay in your home and avoid foreclosure. If eligible, your lender suspends your monthly payment on a temporary basis, or reduces your mortgage payment. Perfect if you’ve lost a job and can’t afford your mortgage. This provision gives you time to find new employment and get your finances back on track.
  • Mortgage modification. Another option to help with mortgage payments, this provision can completely erase your foreclosure fears. A mortgage modification can help if you’re ineligible for a refinance and experience a long-term hardship. If eligible, your lender modifies or changes the original terms of your home loan, such as the interest rate or the monthly payment. This reduces your monthly mortgage payment to an affordable amount.
  • Repayment plan. Maybe a short-term hardship triggered your delinquency, yet you don’t have the bankroll to settle your past due balance. If you can now afford your mortgage payment, talk to your lender about a repayment plan. This provision lets you pay the past due balance over time. The lender adds a little extra to your current mortgage payment until you’ve paid the past due amount.
  • Deed-in-lieu of foreclosure. But what if you’re already in foreclosure and have few options? In this case, a foreclosure may seem inevitable, but don’t give up too quickly. In this case, you might be a good candidate for a deed-in-lieu of foreclosure, in which you voluntarily transfer ownership of the property to your mortgage lender. This option releases your mortgage obligation. And while you don’t escape credit damage, you can repair your credit quicker than if you had went through a mortgage foreclosure.

Article source: http://www.gobankingrates.com/mortgage-rates/cant-pay-mortgage-loan-foreclosure-invetibale/

Speak Your Mind

*