How can you avoid foreclosure on your mortgage? It may be easier than you think. Both lenders and courts would prefer to avoid seeing you forced out of your home by the law: for them, this is the most expensive and inconvenient solution. As a result you have a surprising amount of leeway to stop foreclosure — and we’ve put together some convenient tips for avoiding foreclosure to help you.
Save Your Home Tips Avoid Foreclosure
1. Negotiate With Your Lender
If the foreclosure process has not yet moved to the court system, you can often negotiate an alternative payment plan. Key to making this succeed is to call the lender as soon as (or even before) they notify you they are planning to foreclose.
The fact is that a legal foreclosure process is extremely expensive and time consuming. Even the much faster Power of Sale process used in some Canadian provinces has serious disadvantages for the lender.
Therefore if you can demonstrate that getting behind on your mortgage payments was due to a one-time emergency, and that you will be able to stay on track in the future, you may be able to work out an alternative payment schedule with the lender. This will let you pay off the mortgage more or less as originally planned and avoid foreclosure before it starts.
2. Do A “Short Sale” or “Friendly Foreclosure”
In many cases you may be facing foreclosure because your financial situation has changed for the worse, or you have otherwise been put in a situation where continuing to live in your current home is not a wise decision.
If this is the case, your goal should be to exit the home as quickly and as painlessly as possible. And, you may find the lender is willing to work with you to expedite this process. After all, they want to avoid “throwing good money after bad” — if you can help them avoid unnecessary legal expenses, so much the better.
The lender may be willing to allow you to do a “short sale,” where you put the home on the market and they agree to accept whatever the home sells for as payment for the mortgage. Since you are likely facing foreclosure because the home is worth less than the mortgage, this may mean a loss for them, but less of a loss than they would take from foreclosure.
Finally you might be able to do a “friendly foreclosure” or deed-in-lieu of foreclosure, where you voluntarily sign over the home to the lender and vacate the property. In this case they agree to forgive any part of the debt which is not covered by the value of the home.
3. Refinance and Keep Your Home
Finally, even if your lender is not cooperative you can still stop foreclosure! The way to do this is by paying off the mortgage.
If you can secure a loan from a traditional lender to do this, of course you should. Yet since most homeowners facing foreclosure do not have the pristine credit that banks want to see, HOS Financial has devised a Refinance Buy Back program that will connect you with private lenders who will pay off your existing lender regardless of your credit score.
The Refinance Buy Back program will let you stop foreclosure even if the process has already gone to the courts. Provided you are still in the “Redemption Period” they will pay what the judge has ordered and the case will close.
Then, you will be able to keep living in your home — without a judicial foreclosure judgement on your credit record — while putting aside a portion of your rent to a future down payment on a traditional mortgage. What’s more, HOS Financial will connect you with expert credit counsellors who will coach your credit back to a healthy state.
This means that by the time you exit the program, usually in 2-3 years, you will be eligible to walk into a bank and secure a regular mortgage. You will have the cash for the down payment in hand. And, your credit will be good enough that you do not need to worry about facing foreclosure again.
Who is eligible for the HOS Financial program? You can use it to refinance your home even if you have bad or no credit. The primary criteria are that you must have a regular source of income and a minimum 10% equity in your home. If you have these two things, you are likely eligible to stop foreclosure by refinancing — all you have to do is pick up the phone and call one of HOS Financial’s refinance specialists now.