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Ways for homeowners to avoid a mortgage foreclosure

Texas homeowners facing foreclosure may be interested in some of the ways that they can work with lenders to stop it. Depending on the lender, several options could be available.

When late payments and financial challenges bring the threat of foreclosure, experts caution homeowners not to panic. Often, there are assets available or places to cut budgets that can help save a home. When payments are late, the mortgage lender should be contacted immediately. This communication up front can in some cases lead to an agreement to work out the overdue payments in a way that avoids foreclosure.

These discussions generally open up a wealth of options. One viable option is a modification to the home loan. This generally entails either lowering the interest rate or extending the payment term in order to lower monthly payments. This lower payment can help the homeowner keep paying on the mortgage and stop a foreclosure. A repayment plan, where a small amount extra is made on each monthly payment, can help to make up for any missed monthly payments. Some lenders may allow a forbearance, which is a change to the loan terms that allows a missed payment or a reduced payment schedule for a short period of time. Another option, particularly when payments are increasing due to a flexible interest rate, is to refinance the loan entirely.

A final option to avoid the credit hit that home foreclosure brings is to sell the home. An attorney with experience in these matters may be able to recommend some options that can stop mortgage foreclosure. The attorney may be able to negotiate on behalf of the homeowner to reduce payments, either permanently or temporarily. The attorney may also be helpful in cases where filing for bankruptcy is appropriate.

Source: Realty Trac, "Stopping a home foreclosure", December 09, 2014

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