Vinsko & Associates, P.C.

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3 common ways homeowners respond to a pending foreclosure

On Behalf of | Oct 27, 2022 | Real Estate Law

Foreclosure is a homeowner’s worse nightmare. The house that you have invested so much money and time into is vulnerable to claims from your lender until you fully pay off your mortgage. The property is the collateral for the loan, which means you could lose the house even after you make 20 years of payments on time.

For many people, falling a month or two behind on their mortgage puts them in an impossible situation. They simply cannot get enough money together to catch up on what they currently owe or redeem the property by paying off the remaining balance on the mortgage. Defending against foreclosure is a better option than just giving up and losing the home where you live.

What are common strategies employed by those hoping to prevent the foreclosure of their homes?

They prove the lender violated the rules

There are numerous protections for homeowners under both state and federal law that mortgage lenders must comply with to successfully foreclose on a property. These include providing certain forms of written notice.

If your lender has made errors in the technical process leading to foreclosure, you can possibly use that in court to prevent them from reclaiming the home where you live.

They renegotiate the loan

Foreclosure can be an expensive process for the lender, and they can lose money reselling foreclosed properties. The longer property sits vacant, the more likely the foreclosure is to drag down its value.

Lenders may be eager to work with a homeowner and extend how long the loan lasts or change other terms so that they can bring their mortgage back into good standing.

They file for personal bankruptcy

Individuals who file for personal bankruptcy have tapped into a powerful tool against foreclosure. The automatic stay can temporarily delay court proceedings. The discharge of their unsecured debts could free up a lot of their budget to help them catch up on their mortgage payments. In a Chapter 13 filing, renegotiation of certain financial obligations is a common practice, the lender may be more likely to work with the borrower.

Understanding the ways in which people frequently respond to a possible foreclosure can help you choose a strategy for defending your homeownership.