Even if the foreclosure process has started, or will start soon, on your home, you may be able to find ways to refinance while the house is still in foreclosure or find another way to get your house back. The beginning of foreclosure, other words, does not mean the end has come.
Get the foreclosure reversed with a good lawyer. If successful, you will save much more than the lawyer will cost you in better credit and a retained home. Pull out your yellow pages or google a foreclosure lawyer in your area. In many cases, your lender will have missed a critical detail in the foreclosure process, or may have cut corners intentionally in order to rush your house into the foreclosure system. The bank will likely fix its mistakes quickly, but this will buy you some time.
Sell all of your assets to raise funds to avert foreclosure. This means cars, jewelry, electronics, furniture, stocks, retirement accounts, or anything else you can think of to liquidate to raise cash. This probably won't get you fully to where you need to be to make a foreclosure stop. However, it will show that you are serious about saving your home and aren't just looking for handouts.
Ask investing friends or family members for help. If you want to prevent foreclosure on your home, you obviously need more money than you have now. Otherwise you wouldn't be in foreclosure. You are going to have to suck up any pride, shove down any shame, and start asking. You may need to bring cash from multiple sources. Many people will feel better about lending money if you sign a legal promissory note. You can get a free form online or have your lawyer draw one up.
Pursue a refinance while the house is still in foreclosure. If you are still in the redemption period (research the rules for your state) then you can buy back the home while it is still in foreclosure. You can do this through your own bank by paying your loan up to date, including all fees and late payment penalties. The bank may even reinstate your old loan. Call and ask! Always in this process, make yourself ask and ask more than once.
If the bank will not reinstate the old loan, or if the laws in your state don't require it to, you will need to refinance and pay off the mortgage. You will likely need 30 to 35 percent of the loan you require as a down payment because of your situation. Talk with a mortgage broker and find out. This is why you have to raise cash from every possible source. But the equity in your home (if you have any) will count toward this amount, so don't lose hope.
Check into government sponsored foreclosure bailouts. You may qualify for the federal government's economic stimulus relief for homeowners facing foreclosure. The HOPE for Homeowners program, for example, that was signed into law in 2008 could help you refinance your home if your lender is willing to take a bit of a loss. Talk with your bank, your lawyer, and research this and other options on the Internet. If you owe as much or nearly as much on the loan as the home is worth, you are likely to qualify.
Consider a short sale or a rebuy opportunity. Again you have to call your lender and ask. Check with your mortgage lender to see if they will consider a short sale, which means it will allow you to sell your home for less than the mortgage balance. There are instances in which they will get more money from a short sale than they would from a foreclosure, since foreclosed properties are expensive to manage and sell at a high discount. Talk to the manager of the short sale department and make your situation sound sad. You will probably need to give permission to release loan information to a real estate agent or buyer; write a hardship account to send to the bank (make them weep); and give written and honest proof about all of your assets.
If you are able to find refinancing, you can then buy back your home from the short sale buyer, creating your own 'mortgage downsize' plan. Again, you will need to consult a lawyer and CPA, for their time and fees are well worth it in the end. You no longer have room for error if you want to prevent foreclosure. This is a tricky move and needs to fit every single law and regulation to a 't.'
Buy the home at or after a sheriff's auction. You need to have a family member or investor purchase the home for you. They can then sell the home back to you, lease it back to you with an option to purchase when your credit recovers, or some other creative option the investor imagines. Somebody is going to buy your home at the sheriff's sale or afterward. It might as well be someone you know who can help you stay in your home, even if they make money off of it.
If you can't purchase the home during the sale, approach the buyer afterward. If the buyer is not the bank that holds your mortgage -- which is the situation in most cases -- they are most likely hoping to fix and flip the home. They may be very happy to quickly turn it around to you and get the home onto their profit sheet. They may even be able to help with financing. Some foreclosure investors are savvy enough to know about land contracts and playing bank for you. You might be able to talk them into playing bank -- you pay them every month on a legally valid loan, and they pocket the interest until you can raise the capital and credit to pay it off in a balloon payment.
If at all possible, do everything in your power to prevent the foreclosure process from completing itself. Do heed the warnings about lawyers and accountants. You will need them! Don't skip that necessary step. If possible, show investors and lenders that your situation did not arise from negligence or lack of effort.
Be careful about who you allow to help you get through foreclosure. Check any company out to make sure it is legit and not a hoax or foreclosure scam. Don't get scammed while trying to dig out of foreclosure.
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