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Understanding Foreclosures: What to Do

Home foreclosure is one of the most difficult problems which face homeowners in our times. In the event that you are facing financial hardship, there are many avenues you can take to prevent a foreclosure from happening. A good starting place is to calculate the value of your property.

How to know the market value of your home

There are lots of ways to know the market value of your home. First, you can talk to experts and find out the foreclosure cost at market value. Good lenders will do their best to assist you when you need an appraisal of your property or discuss financial options in the wake of a possible foreclosure scenario. Alternatively, you can buy a foreclosure list and appraise your home on that list. You can also conduct a forensic audit on the property and in doing so you will know the true market value of the property.

How to stop a foreclosure from happening

Whether you are intending to stall a foreclosure process or go ahead with it, writing a hardship letter to your bank or lender in order to disclose your financial situation and propose for a resolution is necessary. Foreclosure is a long and complicated process, and unless you have some experience with foreclosures, it's difficult to know what method and letter will work best for you. This is why it's important to use a professional, like a lawyer or an attorney, when you can. There are ways to prevent a foreclosure that don't involve a lawyer, such as refinancing, but a lawyer can help you with refinancing as well as other methods.

Drafting a hardship letter to your bank or mortgage lender

To get the best results in a hardship letter, you'll need to look at the options you have. Foreclosure can be stopped with a hardship letter even when you're refinancing and having trouble paying your existing mortgage. You'll need to make sure your letter is written in such a way that your lender actually accepts it and starts reviewing it as a viable alternative to foreclosure. It's important to note that foreclosure is a lengthy process with many twists and turns that may affect the results you see. But, it's possible to stop the process.

Appraising the market value of the home will give you a starting point for negotiating with the bank or lender on your home foreclosure. You can ask for a mortgage with a very low interest rate. You can also ask for a fixed mortgage rate. You can request for forbearance and this will help you to avoid your home foreclosure. You can also ask for a repayment plan. You can also ask for a principal reduction and many more things.

Now, let us go back to the previous scenario. You are the homeowner and the bank is the creditor and you have lost your job and you are not able to pay the monthly mortgage payments. Your home is now a non-performing asset in the bank’s portfolio. The banks have two options with this non-performing asset. They can take ownership of the home and hold it for sale, or they can deed the home to you so you can refinance the mortgage to this property. In this scenario, you will both share the loss. If your bank or lender deems the mortgage non-salvable, they will sometimes take ownership of the property and sell the property for what it is worth on the market.

Either way, the financial statement is the most important in a decision whether to go through with a foreclosure. The lender will want to know what caused the hardship. Was it a death in the family? Was it an illness? Was it a business shut down? Was it a job transfer? Was it a credit card debt? What about the homeowner's other credit line? The homeowner is expected to pay these debts. The homeowner can have a short sale. The lender must approve the short sale. The lender is going to want an appraisal. The lender may charge the homeowner an appraisal fee. There are tax consequences for these transactions. The lender should speak with a CPA to advise about the tax consequences of these transactions. The homeowner can opt to deed the home back to the lender and pay a release fee. They can also have a Deed In Lieu of Foreclosure. This is where the homeowner gives the house back to the lender. The homeowner will not be receiving any money from this transaction. They will be releasing the debt and the lender will not go through the foreclosure process.

There is help for people who want to stop foreclosure at all costs. These types of help are available nationwide and are getting quicker at being available by contacting a foreclosure attorney who can help you get the results you need.


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