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How to Avoid Foreclosure

If you can’t keep up with your mortgage payments, you might eventually lose your home to foreclosure. Some homeowners in this situation opt to short sale their property while others give up on the race and simply walk out of their homes. If you want to try to keep your home, there are ways to reduce your financial hardship and drive up your savings so that you can pay your bills.

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Mortgage Help

The website managed by the Department of Housing and Urban Development (HUD) is just one resource to look into if you want to know how to avoid foreclosure. The Obama Administration also offers help for homeowners under the Making Home Affordable (MHA) program.

Through MHA, it’s possible for borrowers to receive $10,000 so that they can relocate. Or they can try and qualify for lower monthly mortgage payments under the Home Affordable Unemployment Program if they’re unemployed.

Apart from that, the Federal Housing Authority (FHA), a subsidiary wing of the HUD, provides mortgage debt relief via the Home Affordable Modification Program (HAMP), the Home Affordable Refinance Program (HARP) and the Home Affordable Foreclosure Alternatives program (HAFA). Any one of these programs can help you, provided you meet certain requirements.

Having Financial Trouble? Mortgage Loan Modification vs. the Short Sale

For example, to be eligible for HARP, you’ll have to be current on your monthly mortgage loan obligations. You’ll need to show that your property’s value is less than your mortgage loan’s value (i.e. it’s underwater and because of that you’ve been denied for a refinance from your lenders). As a result of this program, you’ll be able to refinance your existing mortgage loan into an affordable one that will provide more stability for your financial condition.

Additionally, some of the largest financial institutions like Bank of America offer various solutions and forms of foreclosure help.

How to Stop Your Foreclosure

How to Avoid Foreclosure

The key to steering clear of a foreclosure crisis is remaining proactive and taking immediate remedial measures as soon as you start to believe that you won’t be able to stay current on your monthly mortgage obligations. That’s especially the case if you’ve received a notice from your lender asking you to get in touch with him.

At this juncture, don’t make the mistake of ignoring the letters from your lender. Here are some steps that will benefit you if you’re at risk of entering the foreclosure process:

  • Request loss mitigation: As an alternative to foreclosure, you can negotiate with your lender and come up with a way to handle your late mortgage payments. For instance, you can ask for forbearance. Your mortgage lender would agree to temporarily drop foreclosure proceedings against your property and refrain from pressing you for monthly payments.
  • Know your rights: It’s a good idea to take out your loan agreement and read through it carefully. You’ll know what your lender can and cannot do if you default on the loan and find details of the foreclosure rules and regulations in your state.
  • Read and respond to letters from your lender: The first letter from your lender will likely discuss loss mitigation options while the second one might inform you of impending judicial proceedings that could be brought against you. If you fail to respond to these letters, the foreclosure court may not accept any excuses for non-compliance with the rules.

Related Article: Buying a Home After Foreclosure

Getting a Foreclosure Defense Attorney

How to Avoid Foreclosure

If all else fails, you might need to contact a lawyer. A foreclosure attorney can act on your behalf to buy you some extra time or help you work out another deal with your lender. If your friends and relatives can’t recommend someone, you can search for a lawyer online through an organization like the American Bar Association.

Then again, if you’re already having a hard time paying for your mortgage, you may not have enough money to cover the cost of your foreclosure attorney’s fees. In that case, your best bet might be to find a HUD-approved housing counselor who can help you brainstorm ways to come out of your mortgage debt unscathed.

Author Bio: Max Snyder is an experienced financial writer and he writes informative financial articles for various authority blogs and social websites. He also provides sound financial advices for an economically safe and secure future. He has participated in many discussions related to mortgage. He has guided several people online through his articles how they can manage their monthly mortgage payments by using online mortgage calculators.

Photo credit: ©iStock.com/mphillips007, ©iStock.com/IgorDutina, ©iStock.com/OJO_Images

Max Snyder
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