How to Prevent Foreclosure

There are about 1.5 million home mortgages in the U.S. listed as “troubled”. Troubled generally means more than 30 days behind in payments and up to “In some stage of foreclosure”.

Many people are facing a real or potential foreclosure problem. They don’t teach you how to deal with this in school; you will need to study and educate yourself as to what are your alternatives.

Just because you have problems with making your home mortgage payments does not mean that all is lost. There are many ways to avoid foreclosure and its problems.

The good news is that some of the bad news from the housing market actually works for you and helps you to avoid foreclosure. You see, with many houses already foreclosed and joining a growing inventory, waiting to be sold into a very soft market, lenders are generally not very eager to foreclose more homes and make their problem bigger!

Lenders recognize that many of their problem mortgages are for amounts greater than the current market value of the underlying collateral, the house. They recognize that they are going to lose money. So they are NOT insisting on full payment or nothing.

Lenders now realize that if they are holding a mortgage for $300,000 and comparable properties are selling for $250,000, that they are not at all likely to get all their money back. So if $250,000 is the fair market value, their best alternative might be to “short sell” the property to the present owner for $250,000 and finance 100% of that.

Otherwise they are going to incur additional costs. Costs like legal and other costs of foreclosure, real estate brokers’ fees to sell the property and maintenance costs while the house stays empty and on the market. If it takes at all long to sell the property it could well deteriorate and depreciate more.

It could very easily get to the point where the property is no longer worth the $250,000 that an occupied, well-maintained house would normally bring. The homeowner can use this scenario to re-negotiate and prevent foreclosure.

There are many ways to avoid foreclosure. If you find youself to be at risk for foreclosure you should make it your business to know all the details of available alternatives, for your own protection.

How to Prevent Foreclosure

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