There are a lot of reasons people fall into foreclosure. You may have a balloon mortgage, where your payments suddenly grew to be unaffordable. You may have built up other debts that make paying your mortgage a challenge. You may have lost a job or gained an obligation.
Whatever the reason, you should know that you have rights. In Florida, all foreclosures go through a judicial process, so you have an opportunity to defend yourself.
Long before it comes to that, however, there may be options that could prevent foreclosure altogether. Each of them requires negotiation with your mortgage lender. You can try to do that yourself, but you may have more success if you hire a lawyer to negotiate for you. The truth is, it’s much harder for banks to ignore you when you have a lawyer, and they will know you are serious.
Examples of foreclosure alternatives
Special forbearances: If your financial troubles are relatively temporary, you may be able to get back on track by asking for a short-term reduction in or a suspension of your payments. The amount you don’t pay now would have to be made up later. To get a forbearance, you will generally need to show that you can make the adjusted payments in the longer term.
Partial FHA insurance claim: If you are in arrears but can still afford the regular monthly payment, you and your lender could make an FHA insurance fund claim to bring your mortgage up to date.
Mortgage modification: This is refinancing your loan so that your payments are lower. You may have to take on additional debt to lower your payments. This option may work best for people who had a temporary loss of income but who have recovered.
Deed in lieu of foreclosure: Depending on how much you owe compared to the value of your home, your lender might be willing to accept title to your house instead of going through the foreclosure process. This would save your lender all the costs involved in processing a foreclosure, so it could be in their interest. It won’t save your house and your credit will take a hit, but it won’t be as bad as a foreclosure.
Short sale: If you owe more than your home’s current market value, you could try to sell it for what you can get. If you negotiate in advance of the sale, your lender may be willing to accept that amount as payment in full. Be careful to ensure you won’t still owe a balance after the home is sold.
The “cash for keys” program: This is a special program that offers you an incentive to vacate your property, allowing the lender to begin the resale process immediately.
A good foreclosure defense lawyer can also fight the foreclosure lawsuit in court. Banks do make mistakes in the foreclosure process, and those may be used to your advantage. If the lender has engaged in unfair lending practices or unfair collection activities, your lawyer may be able to show that you were treated unfairly.
When your home is on the line, it can be devastating for your family. It may be possible to save it through foreclosure alternatives. Even if saving your home isn’t possible, there are still steps you can take to limit the damage to your credit and get you back on your feet.