How to Avoid Foreclosure When You Simply Can’t Pay

How to Avoid Foreclosure When You Simply Can’t Pay

Nothing is more devastating to a homeowner than getting a notice of default.
It means the foreclosure process is starting and you need to make a decision quickly.
The problem is finding out how to avoid foreclosure when you simply can’t manage to pay your current mortgage rates.
Fortunately, you still have a few options at your disposal if you act fast.
Most lenders wait until you miss three or more mortgage payments before they file a NOD (Notice of Default), that even when this happens you still have options. The key is deciding how to avoid foreclosure and minimize the consequences.

Start Negotiating

What many people don’t realize is most lenders would rather work out some sort of compromise that would allow you to get back on track with your payments.
If they complete the foreclosure process and put your home up for auction then there is no guarantee that they will recoup the entire remaining balance on the loan.
On the other hand, if they work out an agreement with you then they know the entire debt will be repaid.

How to Avoid Foreclosure with a Short Sale

An effective negotiating tactic is to agree upon a short sale.
If you get an offer from a buyer after your lender files the NOD, but before the auction is scheduled, then they must consider it.
When they foreclose on your home, they are going to resell it as quickly as possible so if you present them with a reasonable short sale NY offer they are likely to accept it. While they will not recoup the entire balance of the remaining mortgage, a short sale does save them time, effort, and hassle of finding a buyer themselves.

In Brooklyn, it is important to contact a reputable, experienced short sale real estate agent.
There are numerous companies who state “We will buy any house” but they can’t always live up to their promise.
Brooklyn real estate agents know which companies you can trust because they have successfully worked with them in the past.

How to Avoid Foreclosure with Bankruptcy

If you file for bankruptcy in Brooklyn, it will stop foreclosure proceedings immediately.
Federal law explicitly prohibits any type of debt collector from continuing their collection activities.
The important thing to remember is bankruptcy laws are not designed to eliminating your debt.
Instead they are designed to buy you more time and gives you equal footing to negotiate a reasonable repayment plan.
Always consult a bankruptcy attorney because it isn’t always the best idea if you’re only major debt is your mortgage.

How to Avoid Foreclosure with Assumption

Another way to avoid foreclosure is by letting someone else take over your mortgage.
A majority of loans today contain a “due on sale” clause.
It states that you agree to pay off the loan in its entirety if and when the property is transferred to another owner.
Fortunately, lenders are willing to make an exception if you are facing foreclosure and they will modify your loan to allow another buyer to take it over.
Of course they will want to assess the new buyer qualifications, but it is a winning solution for all parties involved.

With such a short amount of time to take action, it is important to understand how to avoid foreclosure.
Regardless of which option you choose, you can expect to spend a large amount of time negotiating with your lender.
Each method of avoiding foreclosure has a unique set of benefits and drawbacks to consider. The most important factor to keep in mind is avoiding foreclosure is the ultimate goal even if the end result isn’t the ideal solution you were hoping for.

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