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How to Stop a Real Estate Foreclosure


How to Buy Foreclosure Real Estate

Buying a Foreclosure Home:
 What is a Foreclosure Property?
 Why Do Sellers Go Into Foreclosure?
 Negotiating Directly with the Homeowners
 Downside to Buying Foreclosures
 Occupied Foreclosed Homes
 Benefits to buying Foreclosures
 Beginner Foreclosure Buyer - Keep it Safe!
 Brand New Homes in Foreclosure
 Buying Pre-Foreclosure
 
Are you facing a Foreclosure?
 The threat of Foreclosure
 How to prevent a Foreclosure
 Avoid Foreclosure Scams
 Get Free Foreclosure help from HUD




The Threat of Foreclosure

The ugly threat of foreclosure is an unfortunate possibility to many homeowners. Unavoidable financial problems can affect a homeowner's ability to make the mortgage payments such as divorce, losing a job, death in the family or expensive medical bills thus resulting in the lender seeking legal action to repossess your home via foreclosure.

Many people do not realize that if your home is foreclosed on, not only do you lose your home, but you still may have to pay the bank an additional amount. In many cases, the home is worth less than the amount owed to the lender. When this occurs, you will owe and the lender will most certainly pursue a deficiency judgment, which is the difference between the amount owed to the lender and how much the bank sold the home for.

For example, if your house is sold during foreclosure for $179,000 and your loan balance with the lending company is $239,000, a deficiency judgment of $50,000 is still owed to the lender.


How to prevent a Foreclosure

The best thing you can do if you find yourself getting into financial problems is to get a your finances under control before you get a notice of foreclosure. It is never too late to reduce spending and get on a budget.

Here are some ways to repair your finances:
  • Stop using credit cards. Pay for purchases with cash. You'll find that it's a lot harder to spend your cash because it is more valuable to you.

  • Pay your bills on time! Even if you've had serious delinquencies in the past, start a new habit of paying your bills on time.

  • Pay off your debt. Never pay the minimum on your credit card balances because you will never get them paid off. Start paying off all your credit cards and loans from the smallest balance to the largest balance. When a credit card balance gets paid off, cut the card up!

  • Get on a budget. Put it on paper (or computer). Every dollar you make will have a purpose. You will spend less and begin to save more. Click here for an online budget calculator.

If you receive a Notice of Foreclosure, immediately contact your bank and speak with someone in their Loss Mitigation Department. Explain your situation to them and be upfront about the financial problems you are having. If you are meeting with them in person, you may want to bring backup with you. For example, copies of high medical bills and collector's notices will show them the pressure you were up against because of a health emergency.

Contact an approved HUD government housing counseling agency in your state. It will provide free information and a list of organizations ready to bail you out when threatened with foreclosure.



Avoid Foreclosure Scams

In recent times, many Americans are facing foreclosure. Unfortunately, there are a number of fraudulent foreclosure-related companies ready to take advantage of these homeowners at this vulnerable time.

These fraudulent companies may call themselves "foreclosure consultants" or "foreclosure specialists." If a company claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a real estate professional, HUD-approved housing counselor.

These scammers will find you as soon as the Foreclosure procedure starts. When your lender files your foreclosure notice with the public trustee in your town, an announcement is made in your local newspaper. Soon, you will begin to receive phone calls and mail from foreclosure scam artists.

There are several scams they use to try to swindle you:

  • Phony Counseling Agencies:Their fees are outrageous and you can do all the services they offer you such as call the lender and complete some paperwork. These counselors may also negotiate a repayment plan with your lender or organize a pre-foreclosure house sale on your behalf. However, these are things the homeowner can do themselves at no cost.

  • Internet and Phone Scams: Some scammers impersonating lenders convince you to apply for a low-interest mortgage loan on the phone or Internet. They then steal your Social Security and bank account numbers. This scam will put you in double the trouble because you are still going through Foreclosure and now your facing Identity Theft.

  • Lender Scams: A lender may claim to rescue you from this situation by refinancing your loan with lower mortgage payments. In the beginning, the mortgage payments are considerably low because you are paying the interest only. At the end of the term, you suddenly realize that the total amount you borrowed is still due in a lump sum balloon payment. If you can't make the entire balloon payment, you may lose your home to the lender.

  • Fake Buyer: A person who calls himself a "buyer" stops at your door and convinces you to sell your property to him for an amount far less than market value and promises to pay off your mortgage. The "buyer" will advise you to transfer the deed of the property to him, move out of the house and stop communications with your mortgage lender. The "buyer" will then lease your home to a third party and start collecting rent. Unfortunately, this con-artist will make no effort to pay the mortgage payments, thereby allowing the lender to foreclose on your property. Remember that signing a deed over to a third party does not relieve you from your mortgage obligations.


Get Free Foreclosure help from HUD

The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender. Find a HUD-approved housing counselor near you or call (800) 569-4287 or (800) 877-8339.



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