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If you're in severe financial crisis and can't pay down your mortgage or manage your daily expenses, it's time for some quick action in order to get better control over your money.
If you find yourself unable to make your mortgage payments, one of 2 things may happen depending on where you live. They are:
  1. Judicial Foreclosure: Depending on your state's law, the lender may file for a foreclosure with your local circuit court and send you a summons.
  2. Non-judicial foreclosure: Some states permit a lender to foreclose without having to go into court as long as the lender follows that state's foreclosure procedures. This is called non-judicial foreclosure. Here, the lender will send you a default letter, and a notice of default will be filed. If you do not cure the default after a certain period, the lender will mail you a Notice of Sale, record it, and publish it.
However, you can avoid foreclosure. It can be as simple as planning your budget each month so you have an emergency fund to meet your monthly mortgage payments. If these options don't work, try loan modification. With a loan modification, you will be able to reduce your monthly mortgage payments and extend your loan term. Read on to find out how you can avoid foreclosure.


11 ways before lender files foreclosure

  1. Build Emergency fund:
    Apart from creating a budget, put some of your paycheck into an emergency savings account fund to ensure that you have enough cash to continue paying the loan.
  2. Cut down on expenses:
    If you're having a tough time paying your bills, try and find areas where you can minimize your spending.
  3. Cash-out assets/Take up a second job:
    Try cashing out assets like stocks, savings accounts and investment property that if sold can give you a lump sum you can use to pay down your debts. You might even consider getting a second job.
  4. Enroll with a Credit Counseling service:
    If you are having problems paying off your loan and want to avoid foreclosure, contact a housing/credit counselor for financial advice. There are FHA and HUD approved counselors to help you with the following:
    • Analyze your finances and prepare monthly budget to ensure that you can meet your daily expenses and repay your debts.
    • Call the lender and discuss about workout options that can help you keep your home.
    • Protect you from future credit problems before you are too far behind on your mortgage.
    • Provide information about assistance programs/services in your area.


    You'll find a state-by-state list of HUD approved counseling agencies in the "Related References" section below. You can also contact counselors associated with the National Foundation of Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

  5. Obama's Making Home Affordable program:
    If you have a Sallie Mae or Freddie Mac mortgage, then you may be eligible for mortgage assistance as part of Barack Obama's Making Home Affordable program. You can also get assistance with short sales and deeds-in-lieu.
  6. Refinance the existing loan:
    If there's enough equity in the home and you satisfy the lender's guidelines, then refinancing may be a good option to avoid foreclosure. When you refinance, don't get lured in by the low initial rates on ARMs or interest-only payments; the chances are good that you will face even higher interest payments on these loans once the rates start adjusting.
  7. Emergency Mortgage Assistance programs:
    If you have lost your job or your income has been reduced, and you feel it's not possible to pay down the loan, you can get help from an emergency assistance program in order to avoid foreclosure. Hope Now is one of the many programs available in the market.
  8. Forbearance and Repayment plans:
    With forbearance, the lender may reduce your the amount you pay each month or even suspend it for a few months so you can get back on track and continue paying. Often the lender suggests a repayment plan so that the arrears are rolled into the amount of the loan balance and you can continue repaying the debt once the forbearance period is over.
  9. Reinstatement:
    The lender may be willing to accept the entire amount you owe in a single payment on a specific date. Then you can continue repaying the debt on a monthly basis as though you were never behind.
  10. Loan Modification:
    Loan modification is one way you can avoid foreclosure on your home. This involves an agreement between you and the mortgage company where the original terms and conditions of your loan will be modified so that you can afford to pay on the mortgage.
  11. Foreclosure Intervention program:
    There are agencies that grant funds to delinquent borrowers and help them negotiate with lenders about rescheduling payment. In order to qualify you for these grants, the agency will look at a number of factors such as:
    • Your income,
    • The reason for the late/missed payments or inability to pay,
    • Your housing ratio
    • Your ability to pay in future.


    While there is a maximum amount of money these agencies can lend, if you have FHA insured loan, you may qualify for an interest-free or a payment-free loan to pay off the debt and get current on the loan. The loan needs to be paid back only after you've repaid the mortgage.


6 ways after lender files foreclosure

  1. Seek Court Protection:
    If you are unemployed or underemployed, then depending on your state's laws, you may be able to seek the protection of the court. In this case, the court may postpone foreclosure for the next 6 months so you can try and gather the funds to get current on your loan.
  2. File Chapter 13:
    You may file [url=http://www.mortgagefit.com/bankruptcy/chapter13.html]Chapter 13 bankruptcy[/url] and avoid foreclosure sale if your other debts are preventing you from becoming current on your mortgage. Chapter 13 is designed to help you restructure and pay back your debts within 3-5 years.
  3. Sell off your property:
    If you no longer wish to keep the home, you can try to sell it off at a price equal to the fair market value. The best way to try and sell your property is to list it with a realtor or real estate agent.
  4. Try for short sale:
    A short sale is where you try to sell your property for less than the amount of your loan. If you attempt a short sale, you must get any offer approved by your lender. Learn how a short sale works.
  5. Ask your lender to accept a deed-in-lieu:
    If a short sale isn't working, then you might want to try to get the lender to accept a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url]. However, most lenders are reluctant to accept a deed in lieu because they have to manage the property until they can find a buyer.

    With a deed in lieu, you give the house to the lender in exchange for being released from the debt. This will also lower your credit score. Learn more...
  6. File Chapter 7:
    Filing Chapter 7 will put a temporary stop to a foreclosure. However, depending upon your state laws, you may or may not be able to keep the home. Learn more...


What if none of the options work for you?

If you fail to use of any of the options stated above, there's no other option but to let your home go into foreclosure.

Prior to judgment, you may be able to redeem the loan by using the right of redemption if your state grants you this right. This allows you to pay off the mortgage along with the lender's court costs and attorney fees.

Foreclosure is one of the worst things that can happen to you. The best thing to do if you're in danger of falling behind on your mortgage is to contact your lender or a credit counselor and discuss how you can avoid foreclosure.

Related Readings
Related Forum Discussions
Related References
jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi POP,

You can get court protection against lender in case of unemployment and underemployment. However, it would be better if you could contact an attorney and get his opinion in this regard.

Thanks

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:38 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my current loan is $416,000 but my property is worth $150,000.How can I get my lender to reduced my mortgage to $150,000

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:38 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

can I write a hardship leter to my lender requesting a loan reduction.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:38 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi HENRY,

You can definitely write a hardship letter and request for a principle reduction. You should explain your financial crisis clearly when you write the hardship letter. It depends upon the discretion of the lender whether or not he would accept the request for principle reduction.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I've seen alot of people hurt by the foreclosure crisis. Recently I've created a website that will help people use their rights and fight back. The most important thing to do is STOP THE SALE! When someone misses a payment they have to send letters requesting their documents, but not just any letter they have to site the federal statute. If they're in a judicial state, file an answer, if in a non juducial state, file a lawsuit. Forget loan mods, I've spoken to people high up at the bank (Chase), there's an Obama line and they'll even answer it, but they'll ask you to fax your info to them. The only problem is the line is always busy! Make the bank stand by what they say they're going to do.

[size=9:95578af6de][color=Red:95578af6de][Email address deleted as per forum rules. Thanks.][/color:95578af6de][/size:95578af6de]

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:38 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Here's that letter, good luck:

[size=9:1ad8717ed3][color=Red:1ad8717ed3][System detected duplicate content, converted into image. Thanks.][/color:1ad8717ed3][/size:1ad8717ed3]

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

just curious, ivan...what are your credentials? what position do you hold that provides you with such expertise?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I think people should learn to do thier own loan modification to get out of trouble instead of paying thousands in fees to get others to do it all for you!
you can learn more ...

http: //loan-modification-kit.blogspot.com/
(copy that in your browser without the space and see)

peace,
David

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Am i to understand that a person has to live in the home for the length of the mortage or face foreclosure.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Leon,

If you take a mortgage on the property, then you will have to pay it off. If you are unable to pay the mortgage dues, the lender would foreclose it to recover the dues. If you can pay off the loan accordingly, the lender will not foreclose the property and you would own it free and clear.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

mortgage debt balance-165,000 in a 4br ranch house in roanoke, virginia
montly payment-1,600
not able to pay mortgage amount d/t lack of funds/hours cut off from work
value of house is less than debt balance
opting to leave the house and rent another house with 300 less than our mortgage montly payment
is this a good idea?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi villabong,

If you want to get rid of the property, then short sale is a good option. It will help you in selling off the property. However, you should remember that you would be liable for the deficient amount resulting from the sale of the property. If you cannot pay off the deficient amount, the lender would place a lien on your other properties or can garnish your wages.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We were denied modifcation loan because we didnt come up with 5.000 payment at the end of the contract. Now I am looking at the [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url] option? How long will we be able to live in our house if we go this route?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Could you quickly reply, I may be without internet next

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi thresa!

Welcome to forums!

[url=http://www.mortgagefit.com/deed-lieu.html]Deed in lieu of foreclosure[/url] is a good option in order to get rid of your property. You will have to write a hardship letter to the lender in order to apply for a deed in lieu. It will take around 90 days to complete the whole process. Once you surrender the property to the lender, you will have to vacate it.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We got served with foreclosure papers last week. We requested the total amount from the banks attorneys and are being charged an additional $6000 on top of the late payments. We would like to pay back what we're behind but want them to waive the $6000 fee. Is that something that banks will do? Also, if we reinstate the loan, can we still ask for a modification after? We just don't want to lose the house and don't want to take a chance on losing the house if we don't get a modification for one reason or another.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Ana,

It would be the bank's discretion whether or not it would waive off the fees. However, you should negotiate with the lender for the same. Inform the lender that you would be able to pay off the loan dues and reinstate the loan and in turn want the fees to be canceled. He would let you know whether or not it would be canceled.

You do not need to modify the loan after bringing it current. You can even apply for a loan modification now. However, I don't think after reinstating the loan, you would become ineligible for a modification.

Thanks

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sanachatilo's picture
sanachatilo | Joined: December 10, 2009 12:44 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We can avoid foreclosure by paying our obligation regularly, but due to some circumstances happened like you lose job and you can never pay your lender, you can go straight to them and ask for an extension of the mortgage.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

okay...

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:38 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my wife and i are current on both the 1st and 2nd mort but the 2nd mort has a high interest rate and we are upside down with the two mortgages and when we call the 2nd mort company they are not trying to hear us about lowering the rate. what should we do?

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eric1's picture
eric1 | Joined: January 4, 2009 03:52 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

NJ, you cannot simply ask for the rate to be lowered. You need to show the bank (in writing) what your financial situation is. You need to show your monthly cash flow and detail what payment would work for you. If you have a plan, they will be more willing to listen.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If we go with a quick sell of our first mortgage, what can the [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] holder do?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Mark,

Though you short sale your property, you would still be responsible for the second mortgage dues. The second lender will have the rights to collect the dues from you. If you're unable to pay off the dues, the lender will charge off the loan.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Here's the joke. My wife and I both have FICO scores over 850. Never been late on a payment on anything in 30 years. Had two slow years of work, burned through my savings on the house. The cheapest we could find in the market 5 years ago. First house. All lenders said no worries, rates will be great for years to [url=http://www.mortgagefit.com/refinance.html]refinance[/url]. The year I got in I made over $160,000. Close to $200,000 combined. Combined both my wife and I make over 70,000 normally. Never went to Hawaii, all cars paid off, no cable TV. Need a bit of help and none of our creditors will even so much as let me skip one month payment to catch bills up. Joke is many of our friends who have been footing the bill for this country for 30 years are all scrambling for apartments. Well, I guess at least that way we'll have more in our pocket to keep bailing out the banks. We're walking from it all. Not worth the headaches. Quality of life is more important than a crappy house. The great American nightmare. Unless you are super wealthy or have help. Do the Deed in lieu. Short sale is nightmare.

P.S. Out of all of our friends who have done short sales, Deed in Lieu, begged for (or paid) to get a modification and gone into foreclosure not one of them or myself has had the bank come back and say, ‘Hey don’t move. We’ll help you with a modification.’ Do you see any posts here referencing that? We have been trying to get a modification for 9 months. They string you along saying hey you forgot to check this box or dot that ‘i’ so they can squeeze every last cent out of you before the ship finally sinks. Do yourself a favor; find a nice apartment while your credit is still intact if it is and take care of your survival first because no one will be there to help when you are out on the street and homeless.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Your query has been answered in the given page:
http://www.mortgagefit.com/forbearance-1.html#140331

Please take a look at it. I hope it will help you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

can you give me a sample letter to send to my mortgage co. offering them a deed in lieu of foreclosure?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

You will have to write a hardship letter to your lender asking for a deed in lieu of foreclosure. Check out the given page in order to know how you can write a hardship letter:
http://www.mortgagefit.com/problems/hardship-letter.html

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md.81's picture
md.81 | Joined: December 30, 2009 01:53 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have an investment property which is vacant land, large bare acreage in California. I will be able to reinstate my deed of trust before the Trustee Sale. A Notice of Default and subsequent Notice of Trustee Sale have already been recorded with the County.

Can something be recorded with the County about the reinstatement?
Are there alternatives to have a reinstatement mentioned or picked up on the credit reports?
Is the credit score impacted less than it would be, that is what impact would just a Notice of Default have, a Notice of Default plus a Notice of Trustee Sale have; Notice off Default plus Notice of Trustee Sale resulting in a reinstatement versus a full foreclosure?

Thanks and happy New Year!

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi md,

I don't thing you'll be able to record something in the county recorder's office regarding reinstatement. In my opinion, you should inform your lender that you will be able to reinstate the loan. He will let you know what steps you need to take in this regard. As far as I know, your credit score will be affected due to the late payments for which the Notice of Default and Notice of Trustee Sale has been filed.

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patboo13's picture
patboo13 | Joined: February 4, 2010 10:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a home in CALIFORNIA that i use to live in but no longer do, i currently have renters in it. I was given a loan about 5 years ago for the home which i bought for 380,000. I put 80,000 dollars down for the house. I currently owe 325,000 because of neg-am loan putting money on the back end. I have a first mortage for 300,000 and a second for the rest. I haven't paid on either loan for 7-8 months. The first mortgatge company Back of AMerica has not contacted me at all, the second has and i told them i wanted help, they said they couldn't till i defaulted so that is what i did. The second has since given my loan to a debt collection agency. What are my options and what should i do? if there is anyone that has been through this or knows what to do i would love to hear from you.
Thank you good luck to you all

[size=9:e2475568a6][color=Red:e2475568a6][Email address deleted as per the forum rules. Thanks.][/color:e2475568a6][/size:e2475568a6]

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi patboo!

Welcome to forums!

Your query has been answered to in the given page:
http://www.mortgagefit.com/california/walkaway-debtcollection.html

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Kindly define these terms as I am not understanding how if I am paying insurance on the home (and I believe or am lead to believe this includes taxes) why am I paying additional in escrow and how does that get calculated ---[font=Arial:d59ccf69b6][/font:d59ccf69b6][size=12:d59ccf69b6][/size:d59ccf69b6]

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

An account held in the borrower's name to pay the property taxes and insurance premiums is known as an escrow account. As far as mortgage insurance is concerned, it is an insurance policy which compensates the lenders for losses if you default on your home loan. You need to contact your lender and ask him to clarify the whole thing. This will help you know whether or not you are paying extra.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

it's highly unlikely that you're paying "extra." you may be paying a bit more than is absolutely required for the lender to take care of taxes, insurance and mortgage insurance (if any), but lenders are required to analyze their escrow accounts and adjust accordingly (up or down) so as to not have too much or too little in the account to make the required payments.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i lost my job and my husband has been on unemployment also , I want to know if theres any thing i can do to save my home i tried modification but they tell me i have tomany bills so they cant help me.

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi victoria,

As per the expansion of the Obama's loan modification program, temporary help will be provided to the borrowers who are presently unemployed. You need to contact your lender and check out if he is ready to offer you such help.

Take care

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caldwellb02's picture
caldwellb02 | Joined: April 9, 2010 06:29 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am new here so forgive me if this sounds too strident. I am not seeing stories of the real hell people are being put through in trying to get [url=http://www.mortgagefit.com/know-how/loan-modification.html]loan modifications[/url]. Can you steer me in that direction? There are lots of stories on www.shamethebanks.org

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi caldwellb,

A lender will give you a loan modification depending upon certain criteria. For example, if you do not have employment when you apply for a modification, your request won't get accepted. The lender will think that you won't be able to pay off the loan even if it is modified. The borrower should take proper steps in order to negotiate with the lender and get a modification.

Thanks

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i don't think that is what caldwell is looking for, but that's okay. i don't need to continue reading about the hell people are going through to undertstand that lenders are not prepared to act quickly enough, borrowers don't understand the process, lawyers and their ilk are too quick to file frivolous lawsuits that inhibit the program further and that the entire mess was misinterpreted to begin with. i don't think our government gets what's going on - look at how many stories our fiscal "advisors" have provided already.

i'd just as soon not see more hell stories, but a few more favorable pieces of news so we can at least see that someone's being helped.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Dear Jessica
I have a restaurant property which was vacant and I was unable to find a tenant so I fell behind in my mortgage payments. I have now found a tenant with lower rent and I am able to make payments but lower payments and bank has agreed to accept lower payments for two years but they want me to give deed in lieu and forebearance payment for two years and they will add all the interest payments in the back end with any and all costs due and payable as a baloon payment in two years. I am not sure if this is a good agreement Do you know of any attorney I can see before agreeing to this.

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Nick,

A deed in lieu of foreclosure will help you in selling off the property. It will not save your property. I would suggest you to contact your lender and check out the whole agreement. You can ask your lender to give you a copy of that agreement which you can show to an attorney and take his opinion. The attorney will help you in deciding whether or not you should go for this agreement.

Take care.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

by all means you need an attorney...speak with friends, family, business acquaintances, etc. in order to get a referral of an attorney who can be of assistance. you want someone who specializes in real estate, of course.

a deed in lieu of foreclosure transfers ownership of your property to the lender - i don't see how this is any form of "workout" situation for you that will enable you to keep the property. it looks to me like the lender is seeking possession and ownership of the property as well as payments on the underlying loan from you.

before you sign anything at all, you need legal counsel.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Does a Deed in Lieu of Foreclosure effect your credit. I had a rent-to-own fall through and now can't afford the mortgage. I have an 800-ish credit score and DO NOT want to screw it up. I owe $212K on the property and will be lucky to get $220K. Would almost rather just walk away from the whole mess but do not want to mess up my credit. Just heard about this . . . help?

Danella

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Danella,

Yes, a Deed in Lieu of Foreclosure does effect your credit negatively. However, in comparison to a normal foreclosure, the Deed in Lieu of Foreclosure's negative effect on your score is less. Still, it is better to go for a loan modification. It allows you to keep your home. It doesn't even hurt your score, and the loan amount may get reduced.

Thanks,

Sandra

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How far can you be behind on mortgage payments before you can seek chapter 13... And can this help also include other payments I may have so we can get things back in order to start paying all of our payments on time again.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome anonymous,

As far as I know, there is no such time period to default the loan before which you won't be able to file Chapter 13. You will be able to file Chapter 13 even if you are a month late on your mortgage payments. You will be able to include your other debts as well when you file bankruptcy.

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we filed for bankruptcy, and it is done, but since we have missed over 6 house payments, they sold our house without due process, meaning no legal serve, or posting?, when do i have to leave the premises, or what else if anything can i do?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

I've given my suggestions in regards to your query at:
http://www.mortgagefit.com/problems/home-auctioned.html

Take a look at it. Hope it helps you.

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jenny.smith's picture
jenny.smith | Joined: July 20, 2010 05:56 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The best way to avoid foreclosure is to prevent the filing of a notice of default. Lenders do not want to exclude, but will file a notice of default to protect their interests, if any. If you know that is unlikely to meet their mortgage obligations, the first thing to do is call your lender.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We are an active duty family and were forced to move due to orders. Our home has been on the market since 10/2009 and so far, no offers. We now reside in a different state, 2400 miles away and are behind on mortgage payments by 6 months. We were served a summons /foreclosure notice 2 weeks ago. We have been trying to work with the bank ( Citi mortgage) but they are not very helpful and keep losing paperwork. We have requested a [url=http://www.mortgagefit.com/deed-lieu.html]Deed in lieu of foreclosure[/url] now, hoping it will get approved before my husband deploys in 2 months. What kind of tax consequence are we looking at? Will it make a difference that my husband will be deployed when final papers are signed since all income is non taxable during deployment to a war zone?

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