Avoiding Foreclosure

Mar 12th, 2008 @ 12:32 PM by MortgageMentor

Many borrowers wonder when they should begin contacting their lender, if loan payments have become late. Most lenders suggest that the wheels begin turning when your payment becomes 16 days overdue. At this point, the lender may try to get in touch with you to help decide how to bring the payment current. If not contact the lender yourself. At this point, lenders might still try to arrange a repayment schedule. You will have to pay some of the delinquent amount up front, and pay off a portion of the balance every month for a year or more. If you have already missed two or even three payments, you might owe the lender legal fees.

If you have a serious financial loss, such as a layoff or a sudden lower income, there are still ways to prevent foreclosure. Your lender might help you sell the home in what is referred to as a short sale. In this case, the house is sold for less than the loan amount, but the bank will still lose less than they would with a full foreclosure.

If you can afford your monthly mortgage payment, but the repayment plan offered by your lender is something you can’t do, you might consider filing bankruptcy. Selecting Chapter 13 might encourage your lender to offer an easier repayment plan. Usually in a Chapter 13 bankruptcy, borrowers are given five years to catch up on payments instead of one. This is something to seriously consider, though, and an issue you should discuss with your financial advisor first.

If you’ve allowed your loan to become 90 to 120 days overdue, it will probably be turned over to the foreclosure department. At this point they’re trying to reduce the loss as much as possible. So the bank will move quickly toward a foreclosure sale.

One Response to “Avoiding Foreclosure”

1. Troy Jessie says:

   December 19, 2010 at 2:31 pm

   I need some help with my mortgage. I have been working two part-time jobs for the last 6 months. I was laid off of one job and continue work at the other one. The bills have caught up to me and my family. Please help if you can.

   Thank you,
   Troy Jessie