Distressed Property Blog

Today I want to talk about three strategies to fight foreclosure. There are many options at your disposal to save your home, and, as the cliché goes, knowledge is power. Today we’ll talk about obtaining a mortgage forbearance agreement, seeking a mortgage agreement modification and declaring bankruptcy.

You may qualify for a forbearance agreement. You should know that your lender may be mandated by law to help you repay missed payments through a negotiated repayment plan. Unfortunately, lenders often make obtaining a mortgage forbearance agreement difficult for distressed homeowners. As always, it is essential to know your rights under the law—it could, after all, make the difference between keeping and losing your home.

Another viable option for many distressed homeowners is refinancing your debt or readjusting the terms of the original mortgage loan. By doing this, you can repay the lender over time, have a more affordable monthly payment and, most important of all, stay in your home. If your lender is willing to make a mortgage agreement modification, this is often the best way to repay any missed payments and stop the foreclosure dead in its tracks.

There is, rightfully so, a stigma associated with declaring bankruptcy, but declaring bankruptcy can be the best option available to some distressed homeowners. If you are in a position where you are going to lose your home (and all that goes with that), declaring bankruptcy is something you should seriously consider. If done properly, declaring bankruptcy may keep you in your home and give you the fresh financial start you have been seeking (you can even improve your credit through declaring bankruptcy). Using bankruptcy as a strategy to save your home may be most effective when used in conjunction with other strategies that we will discuss on this blog.

These three strategies—obtaining a mortgage forbearance agreement, seeking a mortgage agreement modification and declaring bankruptcy—are all tools that should be in your toolbox when you face foreclosure. Like a carpenter on the job, you are not going to use every tool for every situation. It’s important to know the specifics of the task at hand and only then to use the most appropriate tool for the job.

This brings me to my last point for today. Like a carpenter called to someone’s house to undertake a project, take the time to accurately assess the situation before you start swinging the proverbial hammer. A distressed homeowner must know the real value of his or her property. Regardless of what tool you use to fight foreclosure, you will only be effective if you understand the totality of the situation. How much real equity do you have in your home? Have you been the victim of an inflated appraisal? Or worse, were you the victim of predatory lending? Mortgage fraud? While it may not be pretty, knowing the down and dirty situation will be your greatest asset when it comes to saving your home from foreclosure.

Hang in there, and next time we will discuss some additional proven strategies to stay in your home.