Can You Avoid Foreclosure?

A good economy is the engine that drives the real estate market and when the economy goes south many people are forced into foreclosure. Regardless of how careful you are with money, financial emergencies can happen. When they do, they can keep you from being able to pay your mortgage.

If you are not able to make your mortgage payments, the lender can initiate foreclosure proceedings. In a foreclosure, the lender will repossess your home and resell it to recoup the loan amount. Not only do you lose out on your home, the lender often loses money as well so it is not good for anyone.

Your lender can begin the process of foreclosure after just one missed payment but this is not typical. It usually takes three missed payments before the process is begun. There are two ways this can be done, either through judicial sale or power of sale.

In the case of a judicial sale, the court has to oversee the process. With a power of sale, the mortgage holder can handle the sale alone. Judicial sales are possible in all states while only 29 states have power of sale as an option. If you are in one of those 29 states, this will normally be mentioned in your loan agreement. There will be a clause saying that this is the method that will be used should foreclosure become necessary. All involved parties will be notified that the process is being started beforehand.

When the home is sold for less than a amount of the loan, a deficiency judgment can be made which requires you to make up for the loss. This amount can be the different between the loan amount and the sale price. Or, it can be the difference between the loan and the fair value price.

You may be able to avoid foreclosures. The key is communication. You may be embarrassed to talk to your lender about your finances but it is the best way to try to work something out. Your lender may be willing to be flexible and help you so that you can keep your home and make your payments.

Find real estate leads to sell your home and prevent foreclosure. Learn more about real estate marketing strategies that won’t break the bank.