Whether it’s your own home or the home of a loved one, the foreclosure process can be a scary and frustrating time in one’s life. If you are currently in foreclosure, it's essential to know that there are options to stop it. In this post, we outline the foreclosure process and your options to stop a foreclosure.
What is Foreclosure? More About Foreclosure
When purchasing a home, you may take out a mortgage loan. Mortgages are used to buy a home, with the home as collateral in a legal agreement you create with the mortgage company.
If you are not making any payments on your mortgage, the lender may choose to foreclose. If they do, it means that a representative of the home's owner is attempting to repossess or sell the home because you have not made any recent payments towards it.
Judicial vs. Nonjudicial Foreclosures
The first step is determining what type of foreclosure process you're going through: judicial or nonjudicial.
Judicial Foreclosures
If your foreclosure process is judicial, then the next steps will depend on whether or not you have a mortgage loan modification (MMI). If you do have an MMI and cannot make payments for some reason, contact your servicer immediately about a forbearance agreement.
Nonjudicial Foreclosures
Nonjudicial foreclosures may require more immediate action. You'll need to explore two other options: bankruptcy and deed instead of foreclosure.
There have also been government protections in place due to the financial crisis in 2008. If you're not sure about your foreclosure type or if the mortgage was taken out before July of 2008, then it's important to consult with a legal professional.
The Foreclosure Process
Foreclosure does not happen instantly, and you can research your foreclosure options on your home. There are four or five different stages where you can find out how to stop foreclosure on your home.
Stage One: Mortgage Broker
A mortgage broker is the first person to call if you have missed a few payments on your home. These people are between lenders and borrowers to negotiate better rates with companies to get them waived or lowered.
If that doesn't work out for you, it may be time to consider stage two of stopping foreclosure on your home by looking at other options.
How do I talk my lender into giving me more leniency?
Can someone buy my house before foreclosure?
Are there any programs available where we can stay in our homes as renters?
Stage Two: Bankruptcy Attorney
Sometimes going through bankruptcy will help to save your home. It's another option in learning how to stop foreclosure on your house.
An experienced bankruptcy attorney can help you get the mortgage company off your back. Working with a bankruptcy attorney is a decent option for those who have been unable to find an investor or homebuyer willing to purchase their house before foreclosure, but it doesn't stop there!
Stage Three: Foreclosure Attorney
If going through bankruptcy isn't enough, getting in touch with a foreclosure attorney may be necessary. They will go after all parties associated with the loan, including banks and lenders, which could save you time if you're looking at other options besides keeping up payments on the current loans taken out for the property.
Stage three is also when homeowners in default receive a notice of sale, which occurs with judicial foreclosures and occasionally with nonjudicial foreclosures.
Stage Four: Notice of Sale
After a homeowner has been given notice and failed to respond, the sheriff will post an actual "Notice of Sale" on their property. A Notice of Sale is where they are legally allowed to sell off all or part of the property for less than the market price to give creditors what's owed.
Once this happens, it can't be undone! If you're looking at other options besides keeping up payments on the current loans taken out for the property, then contact your foreclosure attorney before it gets here.
Stage four is when homeowners have lost ownership rights by defaulting on mortgage obligations so long as there were no intervening events such as bankruptcy proceedings that halted foreclosure during stage three (default).
Options to Stop Foreclosure of a Home
For homeowners in distress, you do have options to avoid a foreclosure of your home. Here are some options that can help you pay off your mortgage or avoid a foreclosure.
Modify Your Loan: One option is to apply for a home loan modification. A mortgage loan modification allows you to modify the terms of your loan may reduce your monthly payments or interest rate, depending on what your current circumstances are.
Sell Your Home: Selling a home due to foreclosure is another option for homeowners to consider. Hiring a real estate agent can help you quickly sell your home.
Short sale: In a situation where a home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale is a voluntary process of a homeowner selling their property for an amount that is far less than what is owed on the mortgage. While a short sale affects credit, it’s typically not as bad as a foreclosure.
Deed in lieu: Also called “deeding the home back to the lender”, the process allows homeowners to give the lender a properly prepared and notarized deed. In return, the lender forgives the mortgage, which cancels the foreclosure of a home.
File for Bankruptcy: Filing for bankruptcy can help stop the foreclosure process. For those looking to keep their home, a Chapter 13 bankruptcy may be the best choice. For those looking to stalling the foreclosure and buy some time, a Chapter 7 bankruptcy is the best option.
In Closing:
With so many options available for homeowners, you can avoid losing your home through foreclosure. When a foreclosure happens, it's time to take responsibility, consider your foreclosure options, and do what needs to be done.
For information on filing for bankruptcy to stop foreclosure in Michigan, the team at Moran Law is here to help. Our experienced Michigan bankruptcy attorneys can help you stop foreclosure and help you file bankruptcy. Contact us today to get a free no-obligation consultation.
