Foreclosure is one of the most devastating legal or financial experiences a person may ever have. After missing a few mortgage payments, they are at risk of not just forcible removal from their home but also the loss of equity that they may have accrued over years of monthly payments.
Those who know they are at risk of foreclosure can take preventative steps to defend their homes from foreclosure by their mortgage lenders. The three strategies below are among the most common.
1. Highlighting regulatory non-compliance
There are numerous federal regulations that strictly limit foreclosure proceedings to protect homeowners. If lenders failed to follow the right procedures, such as sending specific notices at certain points in the process, their technical violations could serve as a defense to the immediate foreclosure action.
2. Redeeming the mortgage
If the homeowner is close to the end of their repayment period, they may only have a few thousand dollars left to repay. It is sometimes possible to sell assets or take out a personal loan large enough to pay off the remaining principal balance and cover the missed mortgage payments.
3. Filing for bankruptcy
A personal bankruptcy can halt foreclosure proceedings and allow a homeowner time to evaluate other options. In a Chapter 13 bankruptcy, they may be able to negotiate a mortgage modification with their lender. In a Chapter 7 mortgage, they may be eligible for debt discharge relatively quickly, which can free up income to address mortgage costs.
Discussing personal bankruptcy and other foreclosure defense options with a legal professional can help homeowners protect their most valuable assets. Those who act before formal court proceedings begin can potentially avoid the devastation of foreclosure.
