When the lender files a Notice of Default, your options are limited. That is why it is better for you to call your lender before falling behind on your payments, because lenders are often reluctant to work out repayment schedules after foreclosure proceedings have been commenced.
You will be given a certain time period to bring the payments current, pay the costs of filing the foreclosure and stop the foreclosure. This is called reinstatement of your loan. If you cannot make up the missed payments and the lender will not work with you, here are a few other options to stop foreclosure:
* Sell Your Home.
Interview real estate agents to get an opinion of market value and average DOM to sell your home. You might be tempted to hire a discount broker, but many sellers feel they need the exposure and marketing that full-service brokers offer. Compare both to determine which best meets your needs and time frame.
* Consider a Short Sale.
If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale affects credit but it's not as bad as a foreclosure. You or your agent will need to negotiate with your lender to find out if the lender will cooperate on a short sale. This is called a pre-foreclosure redeemed.
* Sign a Deed-in-Lieu of Foreclosure
This is called deeding the home back to the lender. The homeowner give the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Lenders tell me that deeds-in-lieu of foreclosure affect credit the same as a foreclosure.
Whatever you decide you should usually not make a single move before speaking to a foreclosure expert. Because they deal in this area day in day out they have a much clearer understanding of the foreclosure process and the way it can be stopped or ways you can be helped to move on from a home that's dragging you down than any real estate agent or lawyer.
Real estate investors who are actively involved in the foreclosure market have the right connections, motivation and knowledge that's needed to make sure things get done right, move fast and stay legal.
Facing foreclosure is never a pleasant thing to have to go through but, provided you have a real estate agent who is adept at foreclosures by your side, it can be a lot less painless than many would have you believe.
If you have a question about foreclosures or the short sale process please contact me at batesgrouprealty@gmail.com or my cell at 949-922-6058.
Michael is a local Realtor with Windem Real Estate specializing in Orange County Real Estate. He resides in Costa Mesa with his wife and four children.
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