Your Rights and Options in the Face of Foreclosure

Considering the state of the job and housing markets, it is no wonder that foreclosure is a common concern of many homeowners throughout the U.S. Whether you have fallen behind on your mortgage payments, are facing a balloon payment that you have no hope of paying or have already been served a notice of foreclosure, you may be in need of helpful information and even legal counsel to address the matter. The specific approach you take in the face of foreclosure may vary depending on your financial situation and your goals, such as selling the property to avoid foreclosure or filing for bankruptcy to stop foreclosure proceedings in their tracks.

One of the steps you can take is to consult with a real estate lawyer who is experienced in handling foreclosure purchases and sales, foreclosure defense, short sales and loan modifications. We have also included some basic information on this website, which may help you make a better choice about your commercial or residential property.

Avoiding Foreclosure
There are various ways that you may be able to avoid foreclosure in the first place. You may qualify for a mortgage loan modification or may be able to sell your home. Other options may include a deed in lieu of foreclosure or bankruptcy, but it is important to carefully weigh your options as they may have a considerable impact on your financial stability now and well into the future. An attorney can advise you of the specific advantages and disadvantages associated with each option.

Buying a Foreclosed Property
If you are in the market to purchase a home, you may be considering whether to buy a foreclosed property. Buying a foreclosed home is generally more complicated, but there are specific advantages. Namely, a homebuyer may be able to get the property at a significantly reduced price. The property is also likely to be unoccupied, making it easier to coordinate inspections, appraisals and moving in. A foreclosed home may be purchased at a foreclosure option or by directly approaching the lender, depending on the case.

Deed in Lieu of Foreclosure
When a homeowner is facing foreclosure, one potential option to consider is a deed in lieu. In this situation, the homeowner would essentially turn over the deed to the property to the lender, in lieu of the lender foreclosing on the property. A lender may accept this option because foreclosure proceedings can be lengthy and time-consuming, but it will depend on the specific situation. It is important to go through the proper channels so the homeowner is not held liable for any deficiency in the value of the property versus the value of the loan.

Loan Modification
An increasingly popular option in the face of foreclosure is a mortgage loan modification. This can be tricky, however, and not all lenders will be willing to work with a borrower to negotiate a change in the terms of their loan. With a loan modification, a borrower may be able to negotiate with the lender to modify the interest rate or term of the mortgage loan, thus reducing monthly payments. Past due payments and penalties may also be addressed, though this will vary depending on the particular case. Due to their complexity, it may be best to approach loan modifications with an attorney's help.

Short Sale
A short sale involves selling a property for less than is owed on the mortgage. For example, the homeowner may owe $500,000 on the property, but it may currently be appraised at $400,000. If the homeowner sells the property for $400,000, this would be a short sale because the sale falls "short" of the balance on the loan. Successfully completing a short sale without being held accountable for a deficiency judgment requires working out an agreement with the lender to forgive the remaining balance.

To learn more about foreclosure and your rights, find a real estate attorney near you.