How to Stop a Foreclosure

Real Estate Broker/Owner with Mike & Rita Warfel Real Estate LLC

This blog comes from another state with as many or more foreclosures than we have here in Michigan, has some usefull advice. We are useing short sales as a tool that earns a commission and helps a homeowner move on away from home that is no longer worth what is owed. This is an all to often seen problem due to job loss and or health problems.

Original content by Mike Linkenauger

 3 Ways on How to Effectively Stop a Foreclosure


 With such a delicate economy, one of the most common concerns especially among homeowners is how to stop a foreclosure.  Essentially, in order to stop it, you must first try to understand what it is.  A foreclosure is a type of legal process where the mortgage lender attempts to terminate the equitable rights of redemption of the mortgage borrower.


This can be done via court order or through the intervention of the law after undergoing statutory procedures.  So essentially, one of the ways on how to stop foreclosure is to fight it out in court, which unfortunately is not ideal and never practical.


In the context of how to stop foreclosure as applied to residential mortgage loans, the bank or any other similar type of secured creditor enforces a foreclosure by repossessing the parcel of property of the owner.  The immovable property usually comes under foreclosure after the owner has failed to satisfy the terms and conditions of the loan that is normally referred to as mortgage or deed of trust.


The most common reason a foreclosure is applied when the borrower fails to keep up with the payments or acknowledge a promissory note.  Let us take a look at ways on how to stop a foreclosure from happening.



How to Stop Foreclosure: Selling your Property before Foreclosure


Foreclosure never comes as a surprise.  This means that the borrower already knows that once he goes into default for a loan, the possibility of being foreclosed becomes higher too.


The question of how to stop foreclosure normally anchors on the concern of where to get the money to pay for the housing loan, especially if an acceleration clause is included in the loan contract.  As painful as it may sound, one of the best ways to deal with a foreclosure is to sell the property before it becomes repossessed by the lender.


In the context of how to stop a foreclosure, one of the most effective and efficient ways to do so is to hold and conduct a short sale.  This process allows the proceeds of the real estate sale to go towards paying off your financial obligation to the lender.  Although there is a possibility that the actual amount generated can fall short of the entire debt, it is still the most effective because the lenders will agree to forego of the foreclosure in return for a lesser amount.


From the perspective of lenders, this is a better solution because they are assured that they will recoup a significant portion of the debt. In the essence of a short sale and how to stop foreclosure, the unpaid balance is commonly referred to as the deficiency.  It must be kept in mind that paying off the deficiency of the loan may or may not be required depending on the contract agreement executed for the short sale.


Because of these intricacies, it would be wise to consult an organization that is adept at handling short sale as a means of resolving foreclosure.  What makes a short sale the ideal solution on how to stop foreclosure is that it stops any additional fees and costs from being absorbed by both the borrower and the lender.



How to Stop Foreclosure: Restructuring or Refinancing your Loan


In general a foreclosure would involve significant costs.  This is one of the reasons why creditors in most instances would rather opt for a restructuring rather than complete foreclosure.  In this instance it may seem that restructuring a loan can be one of the solutions on how to stop foreclosure.


However, it must be realized that restructuring a loan results in longer payment terms that can eventually pile up to a bigger debt.  For some banking or lending institutions, this type of restructuring is referred to as Loan Modification Program.


Another solution on how to stop foreclosure that is similar to restructuring is the refinancing of the loan.  This process is ideal if the borrower is not yet in default and can readily refinance the loan with another bank or lending institution.  Basically, what happens is that the loan gets passed on to another bank or lending institution for longer terms and lower interest rates.


If the market value of the property has already appreciated, there is also a chance that the borrower can earn some money from the refinancing.  It must be remembered though that this solution of stopping foreclosure will only work if you have enough time to complete the refinancing.



How to Stop Foreclosure: Maintaining Constant Communication


In a foreclosure, both the borrower and the lender stand to lose substantial amounts of money.  This is the reason why it is always considered as a last resort.  One of the simplest ways to stop foreclosure is to ensure that there is open and constant communication between the borrower and the banking or lending institution.


Keeping the lender abreast of the financial situation or condition of the borrower can help to prevent a foreclosure. Giving the lender updates on the current financial condition of the borrower is an act of good faith.  Moreover, since banks do not want to waste time and money in courts, they will work together with the borrower on the best method to avoid reaching a foreclosure.


In the context of how to stop foreclosure, banks can also assist homeowners in setting up a short sale by linking them with a competent company.  It must be realized by every borrower that banks are also businesses and as such intend to make profits.  This becomes difficult if they get tied up with the complexities of foreclosure proceedings.




Knowing your options on how to stop foreclosure will allow you to make an educated decision on the best way to go.  It is important to keep in mind that when you are finding solutions on how to stop foreclosure proceedings that the bottom line is that you would want to successfully settle all your outstanding financial obligations based on your current financial situation.


Have additional questions on how to stop foreclosure? Want information on short sales? Want to know if you qualify? Contact us for help today! 1-877-737-4903


Are you looking for an short sale Specialist to short sale your home?Our specialists provide short sale expert services to homeowners with no out of pocket costs. Call today to see if you qualify! We also have Distressed Property Expert real estate agents, and they are here to help! These agents are trained in the Home Affordable Foreclosure Alternatives Government short sale programs.




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       Mike Linkenauger

         Mike Linkenauger


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 First Coast Realty Associates



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