When a homeowner fails to make the monthly payments on her mortgage for an extended period, the home may move into foreclosure. Foreclosure occurs when the lending institution fears a loss on its investment and exercises its right to seize and sell the property in an attempt to recover funds. If your home has been placed in foreclosure, your options are limited, but there are still some choices to make.
Right of Redemption
A certain grace period during which you may remove your property from the foreclosure process and return it to normal status exists in some states.. Depending on the state where your home is located, the length of time you have to exercise your "right of redemption" will vary from a few weeks to a few months. To invoke your right of redemption, first research the local laws and see if you are still within the acceptable window. If so, you must contact your lender and make a payment equal to any payments missed, plus any late fees or bank fees incurred, plus the legal costs incurred by the lender. Once all the fees and overdue payments have been paid in full and your account is considered up to date, you have removed the danger of foreclosure.
If your home has gone into foreclosure and is set to be sold on the auction block by your lender, you may have an opportunity to purchase the property again at a discount. When homes are foreclosed and sold at auction, they often sell for substantially less than the market value. If you are in a position to raise the cash price at the time of auction, you may be able to negotiate the purchase and stay in your home. Complications to this process include the lender's right to keep the old debt alive and make sure that you are still liable to pay it. If you buy the home but still owe the mortgage balance you can end up paying double the value of the property or you may lose the home again when collection agents come around. Research your local laws to find out if this option is feasible for you.
If your home fell into foreclosure between 2008 and 2011, a government-brokered settlement program may be able to help you get it back. The benefits of the settlement are limited to homeowners who financed their homes through JP Morgan Chase, Citigroup, Bank of America, Wells Fargo and Ally Bank. The effects of the settlement can range from a check for $1,500 for damages due to faulty bank practices and lost paperwork, to a reduction in the balance of your mortgage up to $20,000. This reduction can make a significant difference in the payments due and may be all you need to get things back on track. Visit the National Mortgage Settlement online to see if you qualify and how to go about making a claim.
The best way to work your way out of a foreclosure status is to prevent it from occurring. If your home is in danger of falling into foreclosure, consider applying for one of several homeowner assistance programs offered by the federal government. Programs exist for homeowners who are out of work, are having trouble making payments on their principle residence and whose property has fallen in value to below the amount owed on the mortgage. Refinancing programs that reduce the loan interest rate to current market values are also offered. You can also contact your lender to ask what can be done to hold off foreclosure if you are having a hard time keeping up. Many banks are willing to help so their assets remain protected.
- U.S. Dept of Housing and Urban Development: Avoiding Foreclosure
- Mortgage News Daily: Foreclosure Happens, But There Are Solutions
- Realtor: My House Is In Foreclosure, What Happens Now? Read more: My House Is In Foreclosure, What Happens Now? | REALTOR.com® Blogs
- Bankrate.com: Can Owners Buy Back Foreclosure at Auction?
- Time Magazine: Who Qualifies for the $26 Billion Foreclosure Settlement? Read more: http://moneyland.time.com/2012/02/10/who-qualifies-for-the-26-billion-foreclosure-settlement/#ixzz1xZqisLpN
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