How to Prevent Foreclosures


Understanding Home Foreclosure and How You Can Combat It

Basics Behind Home Foreclosure

A home foreclosure is the repossession by a third party (usually a bank) of a property once a homeowner is unable to make the proper mortgage payments. Since 2007, the number of home foreclosures has increased significantly as more Americans find themselves unable to continue to pay their home loan note.

How To Prevent A Home Foreclosure

Why it happens : There are many circumstances in which a foreclosure may occur.

-Negligent mortgage payments – the mortgage broker and holders confer with the property owner and the trustee, who is usually a lawyer.

-If the property happens to be insured, the company may offer assistance and/or present the owner with alternatives.

-The property is appraised to determine its market value.

What is done with property that has been foreclosed : In most cases, the property is resold at a significantly lower price, especially if the property is simply based on the taxes, interest, and other penalties owed.

-The property owner does have the right to pay off his debts up to the point of the sale. He must prepare a pay-off statement, along with the negligent payments, lawyer fees (which usually averages out to 5% of the remaining balance of the original loan), and numerous other fees issued by the mortgage company.

-The owner must confront both the payments due and also the legitimacy of the charges issued against him, as the company may attempt to charge him with false fees.

-The trustee, or lawyer, usually challenges the allegedly false fees.

One disturbing trend has been homeowners who intentionally stop paying their mortgage and dump their home on the market. Because so many foreclosures are on the market, the bank is unable to sell them all. This has kept home values low and made it difficult for homeowners to refinance their loans because of low apparaisal values.