How Can Bankruptcy Stop Foreclosure?

The recession that hit us hard in last couple of years has left many out there jobless, or to a lesser extent, with lower wages and salaries. And when your source of income is affected, you tend to struggle to stick to your payment schedules, especially for large payments such as your monthly loan payment for your home! Missing your mortgage payment for a few consecutive months would leave you vulnerable to the risk of being exposed to foreclosure proceedings, especially if your creditor is eager to recover his losses by selling your home to someone who is willing to buy it as soon as possible! If you are caught in such a situation, what can you do to stop foreclosure?

There are many methods and solutions available to homeowners today that seek to put an end to foreclosure proceedings. For one, you could try negotiating with your creditors to delay foreclosure until you get your finances in place, probably with the aid of a hardship letter. Or you could try to refinance your home by making use of the government’s foreclosure assistance! If any of these solutions do not work, then you could, as a last resort, opt for the most drastic move of them all, bankruptcy! File for either Chapter 7 or Chapter 13 Bankruptcy now, and forget about mortgage debts ever again!

Do not fall into the delusion that you would be able to save your home through filing for bankruptcy. The truth is you would not be able to salvage your home, but you can definitely stop foreclosure once you file for bankruptcy, and get your lenders off your back for good! Not only will you eliminate all your current debts, you can also make sure that your creditors do not have the capability of suing you for missed payments in the future after you are declared bankrupt. Nevertheless keep in mind that bankruptcy should only be taken into serious consideration once all other ways of stopping foreclosure has been exhausted, as it has serious implications on your financial stability, especially for the long run! Once you are declared bankrupt, you would struggle to get approval for future loans and credit cards, and even have difficulties when you apply for future employments.

So can bankruptcy stop foreclosure? Most definitely yes, but only if you know how the concept of bankruptcy works, and you utilize decent bankruptcy lawyers to help you out with your case.

Secrets to Stop Foreclosure – Part 2

This is Part 2 of my article on the “Secrets to Stop Foreclosure” In Part 1, I discussed the secrets of how to communicate with your lender and how to find the appropriate person at the lender’s office. In this article, I’ll discuss the secrets of finding someone with authority at your lender’s office, getting your files organized, and learning to understand the foreclosure clock.

A. Find Someone With Authority to Stop the Foreclosure

As you develop a strategy to stop your foreclosure, the secret is to be in close contact with someone at your lender’s office who has authority to stop the foreclosure. Don’t waste your time negotiating with a lower-level collection person who has little interest in your hardship or the reasons you are not making the monthly payments. All he wants to know is when you are going to pay.

The secret here is that collection personnel have no authority to negotiate with you or stop foreclosure. You need to find someone with authority. Here is another secret. If a collection person calls, politely say goodbye and hang up. Then call the main office of your lender. Ask for the names of the branch manager and the senior loan officer. When you get the information, thank the person you’re spoke to, and hang up again.

Wait one hour, call back and ask for the branch manager or senior loan officer specifically by name. Once you are connected, request an appointment. If you can’t get through and no one returns your call, send a letter. Be sure you send a copy to the president of your lender. Wait several days and call again. Sooner or later, you’ll reach someone with authority. This is the person you will want to meet with.

B. Get Organized

It is important to gather together all the documents that relate to your property and your loan. In a typical real estate transaction, you signed a purchase contract, escrow instructions, a promissory note, and either a mortgage or deed of trust. Organize and review as many of these documents as you can in order to understand how the foreclosure process applies to you.

Here’s what you should get:

• Copies of the promissory note, mortgage or deed of trust,
• Copies of all documents and letters in your escrow file (contact the escrow company or title company that handled the purchase of your property to get copies).
• A “property profile” which contains information on all documents recorded against your property. You can obtain a free copy of a property profile from the title insurance company that originally insured your purchase of the property. Also ask the company for copies of all documents recorded against your property in the county recorder’s office.
• Copies of all letters you sent to and received from your lender, along with the envelopes the letters from your lender came in, if you have them.
• Copies of your monthly mortgage statements, loan payment stubs, or any other billing and payment information.
• Copies of all foreclosure documents you’ve received, if any. Also save the envelopes of documents you’ve received, if available. Label one file folder for each group of documents and put them in the folders in chronological order. You will refer to these documents again and again as you fight your foreclosure.

C. Learn the Clock

Foreclosure involves very specific timetables in which notices must be carefully served, mailed, recorded, posted, and published before your lender can legally foreclose.

Foreclosures can be conducted either judicially or nonjudicially, depending on your state. You need to know which type lenders in your state use. Each kind of foreclosure has its own procedural rules, so you need to know whether you are facing a judicial or nonjudicial foreclosure. Here are the particulars:

Judicial foreclosure. Most foreclosures of mortgages are judicial. This kind of foreclosure starts when your lender files a lawsuit in the court in the county in which your property is located. You must be served (provided with) with a copy of the Summons and Complaint for foreclosure. A judicial foreclosure can take anywhere from one to two years.

Nonjudicial foreclosure. Most foreclosures of deeds of trust are nonjudicial. Your lender avoids the court system entirely by having a trustee (a third party who conducts the foreclosure) follow a specific series of notice procedures, then sells your property at a public auction. A nonjudicial foreclosure can take anywhere from three to four months depending on your state.

Knowing the foreclosure clock is another secret to successfully stopping your foreclosure. Once you understand the time constraints within which you are working, you can customize a strategy that fits your particular situation. For example, if you have two to three months until the foreclosure sale, you still have time to bring your loan current, negotiate with your lender, or refinance your property. On the other hand, if you have less than a week before the foreclosure sale, your only option may be to file for bankruptcy.

Remember, the secret is that these time periods are for your benefit–not your lender’s. This is your opportunity to apply a strategy that can most effectively stop the foreclosure.

This article was written by Lloyd Segal. Lloyd is a mortgage banker, attorney, and author of “Stop Foreclosure Now.” His new book helps homeowners understand the foreclosure procedures in their state and develop strategies on how to stop foreclosure.

Stop Foreclosure – 7 Tips to Save Your Home

Faced with the threat of a foreclosure on their home, with all the weight of the mortgage industry and its army of attorneys against them, the average homeowner might feel like David facing Goliath. But David defeated Goliath ! David had a sling and some pebbles.

You have an armory of tactics and options which can enable you to stop foreclosure proceedings in their tracks.

There are certain basic rules to follow if you want to stop foreclosure on your home. *** Do not leave your home. If you do, you may lose your eligibility for assistance. *** Do not speak to the lender’s Collection department, especially over the phone. *** Never speak to any of your lender’s representatives without having all your facts assembled, and your strategy determined.

*** Don’t ask the lender what your options are – know your

options before the real discussions begin. Know and be prepared for the questions and forms you will be faced with. *** Don’t volunteer the fact that you are either unemployed or insolvent, or you’re dead in the water.

(If you are either unemployed or insolvent, you’d better change things pretty quick, for the lender has to be convinced that you have the means to meet the loan repayments, and he will want to see evidence supporting this fact before he will stop foreclosure proceedings.)

*** Don’t rely on your memory – have everything written down clearly, and all your credit history records at hand.

*** Speak to the lender’s Loss Mitigation or Foreclosure department. Be firm, and insist on speaking to the right people every time. *** Make a real effort to understand the legal terms relating to mortgages. To stop foreclosure proceedings, you need to speak the same language as your adversaries. If you cannot fully understand the options, or the terms used, you should certainly speak to a HUD approved counselor – ring (800) 569 4287. And do this as soon as you realise you might be heading for foreclosure. Know your options ! Know your rights !

Stop Foreclosure – Tip 1 Read all communications from your lender. Time is your enemy, so the earlier the potential problem is recognised by both parties, the better the chances of a resolution. Stop Foreclosure – Tip 2 If your property is FHA or VA insured, then your lender must give you the opportunity for a workout. If they refuse, then the FDA/VA may fail their claim for foreclosure. Stop Foreclosure – Tip 3 If you are suffering financial loss due to the death or loss of a spouse, illness, or unexpected increase in your outgoings, contact the lender and request a loan modification, which effectively changes the terms of the loan to lower the payments. This is a very common process, but you will need to provide evidence about the change in your circumstances. If you feel that you qualify for a loan modification, and your lender refuses, contact the HUD for advice. Stop Foreclosure – Tip 4 If your loss of income is temporary, contact your lender and request a forbearance. This means that you may be granted a period during which your monthly payments are “suspended”, after which you must resume your monthly payments plus a partial payment towards the payments you missed. Most lenders have a forbearance program, but may require you to make an initial down payment. Stop Foreclosure – Tip 5 If you have a FFA/HUD loan, you may qualify for a partial claim if the present loan is between 4 months and 12 months delinquent. The partial claim has to be repaid only after the original loan has been repaid in full. Any of these measures can enable you to stop foreclosure on your home. Stop Foreclosure – Tip 6 If all else fails, you could always file for bankruptcy at any time during the lender’s collecting process, and this would put an immediate stop on the lender’s activities. Unfortunately, new bankruptcy reform legislation, to be introduced in October 2005, will effectively invalidate this tactic.

Under the new legislation, you must receive credit counseling from an approved agency 180 days – yes, that’s 6 months – before you can file for bankruptcy. By which time the lender could have filed for foreclosure, and you could be out of your home. Stop Foreclosure – Tip 7 Remember these facts. The US is facing an ever-increasing tidal wave of homeowners defaulting on their mortgages. The average cost to the mortgage industry for each foreclosure is around $25000 ! Foreclosures cost lenders money, big money, so it is in their interests to reach a workout with the borrower, either to rescue the mortgage, if this is possible, or to reduce the loss as a result of foreclosure.

Don’t be intimidated by the lender or his attorneys. Appraise yourself of your exact financial position. Seek advice. Know your rights. Know your options. Be honest in your statements. Keep a written record of all communucations.

You can stop foreclosure in its tracks. And save your home.

About the author:
After 15 years working in the IT industry, author Brendan Forde is now specialising in the financial world, particularly the mortgage and insurance sectors.

There are a myriad of ways that unforeseen hardships can change the joy of owning a home into an incredible burden. Maybe you’ve lost your job, or have unexpected medical bills beginning to pile up, or your monthly mortgage payments have increased beyond your current budget. No matter what the cause of your troubles, ignoring the problem won’t help, it will only make it worse. You must act quickly to resolve the issue.

The following are a few examples of how to stop a foreclosure on your home:

1. Look for Other Sources – Most homeowners don’t realize they have a variety of resources that can aid in making mortgage payments to avoid foreclosure. Consider the income created by unemployment or disability insurance and your savings as possible cash-flow resources. Other examples include slashing the household budget by trading in expensive items like cars, boats, and motorcycles for cash. Even retirement funds can be used, but beware that many people with access to their retirement funds can be penalized for early withdraw and face increased income taxes.

2. Contact Your Lender – If you have reviewed all possibilities of creating cash-flow to pay your mortgage, then it’s time to reach out to your lender. Do this as soon as possible! Your ultimate goal in contacting your lender is to create an agreement that will alter your mortgage so that foreclosure proceedings can be stopped before they are finalized.

3. Review the Options – After contacting your lender, or in some cases the servicing company that handles the loan for an investor, you may have other options available. Typically lenders are not required to make adjustments to your loan, but many will consider it a viable option–one that benefits the lender and you and can include refinancing.

Possible options to discuss with your lender include:

• Deed in Lieu of Foreclosure – In this option, your lender may accept the return of the title to your home, but beware that the lender may still sue for loss and report any uncollected funds due to loss to the IRS as taxable income to you. This option may have negative effects on your credit report.
• Claim Advance – If you have a private mortgage lender, they will often provide a cash advance to bring your loan payments up to date. Sometimes this money is interest free and may not have to be repaid for years.
• Re-Amortization – In this option the payments you have missed are added to the balance of the loan, making your account current. Your debt will increase and your monthly payments will be higher unless the lender also agrees to extend the term of the loan.
• Short Sale – Considered by many one of the best options available to avoid foreclosure, the short sale is an increasingly popular option. In this option, the lender accepts less than what you owe on the property, relieving the homeowner of debt. Lenders are often willing to accept a short sale because it greatly reduces the expense and time involved in foreclosure proceedings. In most cases, a short sale does less damage to your credit than a foreclosure. A qualified REALTOR® will be exceptionally helpful in completing the short sale process with you.

One note of warning, beware of any company claiming that they guarantee they can stop any foreclosure no matter what you owe. The Federal Trade Commission recently compiled a list of warning signs that a “foreclosure fixer” company may be a scheme. Those warnings include any company that requires you to pay for services upfront, tells you to send mortgage payments to it directly, or asks you to turn over the property deed, or tells you to avoid contacting your lender directly.

*This article is already published at http://www.stopforeclosurehenrycounty.com

Letters of Financial Hardship: Letter to Stop Foreclosure

Letters of financial hardship provide an opportunity for the homeowners to stop the foreclosure. It is a part of the documentation package when they request for a mortgage loan modification. A convincing letter of financial hardship is one of the potential ways to stop foreclosure. It’s worth a try because at most the mortgage company can reject the letter. It is important to access the requirements and write a letter to stop foreclosure, before its proceedings start. The fact is that the mortgage companies generally do not want to foreclose homes, as they lose significant money in the process of selling the home at an auction.

In case the homeowner knows that he is going to face a hard time paying the mortgage, for next one or two months, he should immediately contact his mortgage lender. This avoids the extra payment of late fees and penalties. If the homeowner feels that it is almost impossible to make the mortgage payments at its current amount, in the long run, a letter to stop foreclosure becomes necessary to stall the big process of foreclosure of his home. The letter should clearly state the reason because of which the homeowner has fallen behind in his mortgage payments. Necessary documents along with the copy of his checking account, should also be attached in order to prove the hardship.

These documents include:

Housing documents
Mortgage documents
Financial hardship budget

Income Tax PapersThe homeowner should make a humble request to mortgage company for the possible modifications, in order to make the payments affordable. A well written hardship letter to stop foreclosure plays an important role in the process of stopping foreclosure. If one can convince the mortgage lender with substantial proof, the letter can provide a way out of the difficult situation. If the homeowner wishes, he can also asks for some time from the mortgage company, in order to find out a suitable buyer for the short sale of his house. Following are some of the points which should be kept in mind while writing a letter to stop foreclosure.

A Clear Subject Line: In order to reach the right hands, the subject line of the letter should be clear and concise. This also gives the brief idea of what actually the letter is meant for.

Personalize it to a Limit: The letter should give an idea about the hardships the homeowner is facing, however, it should not be his life story. It should make the mortgage company aware of his circumstances, with a valid and genuine reason for the non-payment of the mortgage.
Clarity of the Content: One should try to state the points that are stated in the clearest form, and make a proper summary at the end of the letter. He should not miss out any point which can play an important role in stopping the foreclosure. It is good to be humble and thankful in tone while writing the letter, as the person reading the letter is not responsible for the current circumstances.

A letter of financial hardship is also useful for restructuring or consolidation of one’s debts. Losing a family home can pose a financial as well as an emotional setback for anyone. This attachment should be evident from a financial hardship letter to the lender, on order to regain the family treasure.

About the author:
By Swapnil Srivastava