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How to Stop a Pending Foreclosure

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The Internet is filled with companies offering to help you stop foreclosure. Unfortunately, it isn’t always as easy as others would have you believe. While it is easier to prevent foreclosure, there are a few tips that can delay or provide a full foreclosure stop, and the first step is to identify your lender and your loan servicer. The more you know, the easier it is to avoid foreclosure scams as well.

Negotiating a Foreclosure Stop

Few homeowners actually attempt to negotiate a settlement, even when facing foreclosure. This lack of action creates a situation in which homes go into foreclosure when a short sale could potentially have served as a foreclosure stop, preserving your credit and helping to avoid the additional risks associated with foreclosure such as the risk of a deficiency judgment With a little time and effort, it can be worth it to talk to your lender to see if you can negotiate an alternative to foreclosure, and it's not as difficult as it sounds once you know how.

Understanding Servicers & Lenders

Most home loans are not kept "in-house" but rather are sold and serviced by a third party. Most homeowners use the contact information provided on the monthly mortgage statement, which is typically that of the servicer. Unfortunately, most servicers have limited authority when it comes to renegotiating loans or establishing long-term payment plans. Instead, they are authorized to extend payment terms up to two or three months and may send “workout packages," or forms that require the homeowner to fill out information about their current situation, in order to establish a temporary repayment plan.

If you only need short-term assistance, this may be sufficient, but many facing foreclosure have bigger problems. Unfortunately, they often believe that nothing more can be done to stop foreclosure once these measures are exhausted. This is where the lender comes into play.

Lenders actually own the mortgage and have the final authority to negotiate repayment terms, short sale offers, or major mortgage revisions. Essentially, to affect a foreclosure stop you will need to speak directly to the lender, rather than the servicer of your loan. Unfortunately, tracking down lenders isn’t always easy, especially if the loan has been sold multiple times. However, servicers are required to provide full contact information for all lenders upon request, so make a point of asking.

Be prepared to demonstrate prospective repayment plans and be specific, create a budget, and do your homework before you talk to the lender. Let the lender know how much you can afford and negotiate based upon current sales price, market condition, and rates in your area. Remember, lenders are often more responsive than servicers since they have the authority required to negotiate mortgage deals and would rather work with current homeowners to affect a foreclosure stop than risk empty homes, vandalism, and other expenses.

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