Avoiding Foreclosure: What Are Your Options?

Posted on July 22, 2013 at 10:12am by

While many homeowners are still having trouble with their mortgages, foreclosure trends have been very encouraging in the last couple of months. Foreclosures filings in Missouri dropped 31 percent in June according to mortgage researcher RealtyTrac. This figure echoed the decrease of 35 percent in new filings for the whole country. Kansas showed an even more dramatic decrease of 64% for the same period.

Nevertheless this encouraging piece of news may mean little to the homeowner who is struggling with a possible foreclosure. If you’re in this situation, what can you do to keep your home?

Several financial options may be available to you.

Loan Modification

You could negotiate with your bank for a modification that would make your loan more affordable. A lender would consider this because they want to avoid a costly foreclosure. Some of the more common loan modifications include a reduction in interest rate, extending your payment period, forgiving part of the loan or deferring part of the loan interest-free.

Refinance with Another Lender

This involves taking out a new loan with another lender to pay off your debt to the previous one. One caveat: refinancing may be more difficult to obtain if you are already in financial distress.

File for Bankruptcy

Filing for bankruptcy is not a step anyone will take easily, as it has serious repercussions on your future credit score. It will, however, stop the foreclosure process. Should a lender wish to proceed with foreclosure, he will need to secure approval from the bankruptcy court. A Chapter 13 bankruptcy filing will give you the best chance of keeping your home.

There may also be legal reasons to stop a foreclosure: for example, if you can prove that the lender has made serious mistakes in servicing your loan, if he has engaged in unfair lending practices, or has not followed state procedures prescribed for the foreclosure process. As well, a military serviceman on active duty may be eligible for foreclosure deferment as covered by the Servicemembers Civil Relief Act.

If you are facing a possible foreclosure in Missouri or Kansas, you will need a Kansas City foreclosure lawyer. At The Sader Law Firm, our experienced foreclosure lawyers can help you by letting you know your options to avoid or best deal with foreclosure.

Tags: , , ,