How to avoid home foreclosure

House Refinance Center

How To Avoid Home Foreclosure

What is Foreclosure?

The term foreclosure has been in the news almost everyday since 2007. Many of us
know, or hear about a friend or family member facing foreclosure.

In layman's terms, foreclosure is the legal right of the person or company holding
your mortgage to gain ownership of your house. To put it another way, you borrowed
money to buy a house: you pledged the house as collateral; you do not repay the
loan; the lender takes your house.

Types of foreclosure

As long as there is a default on the mortgage, non-payment of the mortgage, the
mortgage holder can start foreclosure.

There are several types of foreclosure, but two types are commonly used. The most
widely type of foreclosure is judicial foreclosure which is available in all the states.
The mortgaged property is sold under the supervision of the court. The proceeds are
then paid out. First, the mortgage holder with the first lien is paid. The costs involved
with processing the foreclosure are paid, and the lawyers are paid. If there is any
money left over after the foreclosure, it goes to the homeowner.

Foreclosure is expensive. The missed mortgage payments have to be accounted for.
The house taxes and insurance has to be brought up-to-date, any utilities paid, legal
fees and property management fees paid as well. And if the house is listed and sold
by a realtor, the 6% commission has to be deducted from the proceeds.

The second type of foreclosure is the foreclosure by power of sale. This is allowed in
many states if a power of sale clause is included in the mortgage or if a deed of trust
was used instead of a mortgage. This process involves the sale of the property
without court supervision. It is quicker.

Regardless of how you look at it, foreclosure is ugly, and leaves many families broken
and depressed. A homeowner doesn't just decide on foreclosure. There are many
reasons that lead them down this dismal path. Loss of income due to being fired or
laid off is the primary reason of foreclosure. But, with the lack of health insurance,
chronic illness, and personal accidents, personal savings are soon depleted and
around the corner is foreclosure

We can help prevent foreclosure by preparing a budget and sticking to it. Reducing
our dependency on credit cards would help. And enrolling in an insurance plan that
will pay the mortgage in the case of income reduction.

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Delinquent Homeowners Not
Contacting Banks For Help

We just can’t force some people to seek help. There are millions of homeowners
who are about to lose their homes, and they will not ask for assistance.

Lenders and servicers have called and sent letters. They have called community
groups, church groups and non-profits, and have tried to contact these at risk
homeowners. These effort have been with very little luck.

Delinquent borrowers are hard to track down and even harder to get them to accept
help with their mortgage problems.

First Guaranty Mortgage and Sun Trust Bank have found an answer. They have
sent cell phones to the homeowners. When the phone is activated, the call goes to
the bank. The phones are programmed to automatically call the bank. Once
connected, a bank representative will tell the homeowner that the bank would like to
lower the mortgage payment.

The reason many homeowners do not want to talk to the bank is because they know
that even with a huge drop in the mortgage payment, they still can’t afford the
house. So they are playing the waiting game. It would take over a year to foreclose
and kick them out. One year of free rent. Why not?

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National Foreclosure Moratorium

U.S. Senator Menendez has put forward the idea of an industry wide moratorium on
foreclosures. There are questions surrounding the procedures banks are using to
kick borrowers out of their homes.

Senator Menendez has written to the heads of JP Morgan Chase, Bank Of America
and Ally Financial. Ally was formerly GMAC and is 56.3 percent owned by the
taxpayers of America. The Senator stated that it was inexcusable that proper
oversight proceedings were not in place.

Fitch, a leading credit rating agency believes that the practice is widespread in the
housing industry.

Senator Menendez has the influence and connections to make things happen in
Washington. He is the head of a Senate subcommittee on housing.

Lenders and servicers are working overtime to fix this mounting problem. The issue
blew up last month when Ally confirmed that officials had signed thousands of
affidavits allowing foreclosures to take place. The problem is that the documents
were never read.

Banks are expected to foreclose on over 1.2 million homes, up from 1 million last
year.

This black cloud of potentially fraudulent foreclosures, will clog the court system for
many years to come. It will also give the homeowners time to restructure their lives
and their finances.

Visit msnbc.com for breaking news, world news, and news about the economy

Fraudclosure - Family Takes Back Their Home
Family claims they were illegally foreclosed. They went back to the house.
Changed the locks. And moved back in. Watch the above video.

Dealing With Foreclosure
If you are facing foreclosure, do not run and hide. Do not avoid the
lender's phone calls or leave mail from the bank unopened. Here's some
good advice. Watch the above video.

Where's The Note? It's Proof Of Ownership
Many lenders can not produce the note. We need the note to foreclose
on a homewowner. Watch the above video.

Foreclosure Takes A Toll On Military Families
Our military men and women are facing a record number of
foreclosures. Some of these homeowners are overseas in active duty.
Watch the above video.

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Foreclosure Help Is Never Late
If you are facing foreclosure, get help. It is worth all your effort to
ask for assistance. There's no shame.

Watch the video.