If a lender decides to legally foreclose on your property as a result of you defaulting on payments, you have limited time in which to save your home. The lender has the right to begin this process, but you still have options once the ball is already rolling on foreclosure so long as you act prior to the foreclosure sale actually occurring.
When you are facing foreclosure and getting nowhere with the lender, counseling approved by the Department of Housing and Urban Development (HUD) could provide you with a way out. A counselor from HUD may be able to act on your behalf by contacting the lender and negotiating a repayment plan that will result in you avoiding foreclosure. The Georgia Department of Community Affairs website has a number of useful links for finding approved counseling services near you. You can also call HUD at 800-569-4287 or visit the national website for further information.
The lender may facilitate modification of your mortgage loan, but you won’t know unless you ask. There are various potential options for modifying a loan, including: refinancing, interest reduction, or extending the length of the loan to allow for lower monthly payments. Lenders may require debtors to provide evidence their net income is much lower than when the loan was originally agreed upon, or proof of some sort of temporary or permanent hardship.
Interest-Free HUD Loan
If your financial situation is solvent, in that you are able to meet debts, you may qualify for an interest-free HUD loan. You can use this loan to bring a mortgage up to date and avoid foreclosure on your home. When you take out an interest-free HUD loan, the department will require the payment of a fee, and you must sign a promissory note confirming the loan will be repaid. When accepting a HUD loan, a lien is placed on your home until such time as the loan is repaid in full.
A temporary reduction, or stop, on payments owed a creditor is known as a special forbearance. This typically involves negotiating with the lender to modify your loan repayment plan. Forbearance is not intended to facilitate long-term adjustment of repayments. The debtor must provide evidence of financial hardship, such as taking unpaid time off work for medical treatment. Once the agreed relief period has ended, you will likely face higher monthly payments to make the loan current.
Chapter 13 Bankruptcy
When options such as counseling, loans or negotiating with the lender are not viable options or fail, you may wish to consider Chapter 13 bankruptcy. You will have the opportunity to present a repayment plan to the creditor that, if accepted, will result in a court-supervised monthly repayment arrangement that will allow you to keep your home. It is essential you keep up with your repayment plan in a Chapter 13 bankruptcy and continue making monthly mortgage payments, otherwise the foreclosure process may be renewed upon request of the mortgage lender to remove the house from bankruptcy protection.
For further advice on options for avoiding foreclosure, speak to a passionate lawyer from H. Lehman Franklin, P.C., in Georgia today. We understand the bankruptcy process and the stress that foreclosure puts on a family. You can reach our offices at 912-764-9616 or email us at firstname.lastname@example.org.