Coping with Foreclosure: Foreclosure Solutions

If you are facing foreclosure you are not alone. Thousands of people have lost their homes to foreclosure in the last year and thousands more will face financial hardship leading to foreclosure before things balance out.

The Foreclosure Epidemic

Subprime mortgage practices led to what is known today as the mortgage melt-down. The number of foreclosures increased sharply as interest rates were reset for those who refinanced their homes with adjustable rate mortgages (ARMs). The benefit of the ARM was that one could get 100% financing at a very low interest rate. Of course, this rate was only good for three years; most people understood this as they planned on selling their home in the next few years or simply refinancing with a fixed rate mortgage.

Unfortunately, the economy took a devastating turn; unemployment was up and real estate values declined. When people lost their jobs and were unable to keep up with their mortgage payments, this meant that they would not be able to qualify for a new mortgage to refinance their home. Those who were fortunate enough to keep their jobs were also unable to refinance because their home lost so much value that they owed more on their mortgage than the home was worth

To Make Matters Worse

The foreclosure crisis continues as people are forced to walk away from their homes. Lenders and investors are losing money and mortgage guidelines are tightened. People with perfect credit are having difficulty getting a new mortgage with an affordable fixed rate.

If you think that this can only happen to dead-beats, think again. Responsible, hardworking people are facing foreclosure every day. They are devastated; they feel helpless and they just dont know where to turn for help. They are overwhelmed with credit collection letters and phone calls from their lenders demanding that they make their payments.

To add to the confusion, they receive letters from lawyers or other companies promising to save your home from foreclosure or stop foreclosure now. Some of these companies are somewhat reputable, but many are preying on your last dollar as they demand an up-front fee for a service that gives you false hope and ultimately does not provide a solution. Generally, a reputable company will not approach you, call you, or send letters to offer their services. This is the behavior of a predator that got your name from a foreclosure list that they subscribed to.

Foreclosure Solutions

Now that I have explained how we got into the foreclosure crisis, I will cover some of the options available to you. One is to just walk away. Though many people are doing this, it should be your last resort. A foreclosure is very damaging to your credit report and it is one of the items that take the longest time to be removed from your credit history. There are cases where this is your only option, but there are others to consider as well.

You can always contact your lender to see if they will consider a loan modification plan to help make your payments more affordable. They might reduce your interest rate or increase the term of the loan. They might even go as far as reducing your balance and writing off some charges. Loan modification didnt used to be an option when people were already in foreclosure; however, today, lenders are altering their practices as they stand to take a greater loss with so many mortgages in default.

You might try selling your home, even though it is likely that you owe more than it is worth in todays market. There is a good chance that your lender will accept what is called a short sale, where they agree to take less than what is owed to them. Many lenders realize that they can cut their losss by taking a short payoff now, rather than waiting out the foreclosure process, evicting the homeowners and listing the house for sale. They stand to lose more money as the market values continue to decline.

A borrower can contact their lender to begin discussing loan modification or negotiating a short sale; however, many just dont know how to go about it. They are emotionally drained, stressed out and they do not know how to present their case. There are reputable companies who are professionals at handling these negotiations for a reasonable fee.

Article Source: the-Articles.com


Author: DavidSmith.
Search for: foreclosure solutions, foreclosure help, foreclosure options, short sale, loan modification, refinance home, mortgages, real estate services, legal help, credit consulting, home and family, finance


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A Loan Modification Hardship Letter Template Can Save Your House

Often the ability to write a quality hardship letter is paramount to your response in receiving a loan modification. A lender must see on paper the story of how your current financial distress will lead ultimately to foreclosure, unless as a lender, he or she steps in to help with the approval of a loan modification.

To describe in detail just how serious a financial predicament the borrower finds him or herself, a hardship letter template can be used when confronting: forbearance agreements, loan workout agreements, immediate foreclosures and other loan modifications.

A quality hardship letter is effective at a very personal level. You are writing to another human being who happens to be your lender. You want the lender to be moved to help you get back on your feet in your time of financial distress, generally caused by factors outside of your control.

Commonly accepted reasons for asking for a loan modification include a long medical illness, unexpected job loss, family tragedy like a death, natural disasters, etc. If your letter affects the lender on an emotional level, he or she will likely be moved to act in a manner to help you out.

In your loan modification hardship letter template you should include how you got into your current state of financial distress and describe all the mitigating factors that you have tried to get out of your present state. One example could be using up your retirement funds to bail you out. Another example could be that you have borrowed money from a family member.

You should be precise in your letter that your financial options have run out and that the only way that you can avoid foreclosure is if the lender acts. It is also important to state the immediacy of the need for the lender to act by a certain date or else you will have no alternative but to face a loan default.

Be clear in your writing of the mental anguish that you are suffering because of your present financial state. You need to make an impression that you are a genuinely responsible person who has fallen on hard times. To be effective, you need to describe in excruciating detail the personal affect your financial distress is having on your life such as high stress levels, lack of restful sleep and other discomforts.

Finally, provide the lender through your hardship letter template writing, the benefits that both of you will obtain if the lender proceeds to modify your loan. The lender is well aware that if you default, both of you will suffer monetarily by the foreclosure. Additionally, explain in the letter the constructive steps you have taken so that if the lender grants you a loan modification, you will remain current on your payments.

Article Source: the-Articles.com