Foreclosure law gives mortgage lenders the power to repossess and sell homes when borrowers default on loans. The proceeds of the sale are used to pay the loan balance and the buyer takes the home mortgage-free. If the sale proceeds aren’t enough to pay the loan, the borrower can receive a deficiency judgement and they can lose their home. Foreclosures are expensive and slow, and many lenders will work with borrowers to ensure that loans are paid.
Keeping the Home and Stopping Foreclosure
Foreclosure is handled differently by jurisdiction, but the results are the same: the borrower loses the right to occupy the home. For borrowers with significant assets, several options allow them to keep the home. Before a home is sold at a foreclosure sale, borrowers can pay the loan in full and, in some cases, they can catch up on missed payments and late fees, reinstating the loan and stopping foreclosure.
A loan modification is another way for a home owner to retain their property. These involve the lender’s agreement to amend the loan’s terms to make it easier for the borrower to pay. Changes are done permanently, and they typically involve lowering the payment by extending the loan term. Some government programs can help borrowers by subsidizing certain modifications.
Choices for Home owners Who Are Willing to Give up the Home
In some cases, a borrower may not wish to keep the home, which is typical in situations where what is owed is more than the home is worth. When confronted with an unaffordable loan payment, the borrower might be looking for an easy escape, and a deed in lieu is usually the best option; here, the home owner signs the home away and they can stop foreclosures.
Avoiding a Default Judgement
While deeds in lieu can allow a home owner to start over, they present the likelihood of deficiency judgements, and at this stage in the process, the borrower should hire a lawyer to represent them. Deficiency judgements leave the home owner liable for the balance of a mortgage, even after foreclosure and sale so, if a person struggles to pay their mortgage, the best choice is to call a foreclosure lawyer who can defend the them by finding errors in loan documents or in other components of the lender’s case. To learn about legal options to stop foreclosures, troubled home owners should visit right away.
