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A Guide to Surviving Foreclosure

For too many Americans, the word “foreclosure” symbolizes a feeling of powerlessness that has defined the nation’s economic climate for the past several years. If you are
looking at your financial situation and fear that a foreclosure may be on the horizon, it’s time to arm yourself with knowledge now.

Negotiate

Before seriously considering foreclosure, exhaust all your other options. Seek refinancing first. Though refinancing is an arduous process, it may result in a lower interest rate and mortgage payment you can afford. A repayment plan may be an option as well; temporarily lowering payments for a time, and then paying in full when your financial situation stabilizes, may satisfy your lender. Is repayment not an option? Attempt to negotiate a short sale. If none of these alternatives work and negotiations fails, bankruptcy or a reverse mortgage may help stave off foreclosure.

Keep Personal Records

When lenders went foreclosure crazy in the latter half of the last decade, many were accused of rushing through the foreclosure process. In doing so, many cases were identified in which crucial legal documents were overlooked. The foreclosure battle is, waged with paperwork. Make sure to have copies of every document you signed involving your mortgage. Collect every communication you can, written or electronic. As you communicate with your lender, keep records of every written and electronic communication. If your foreclosure case goes to court, those documents may determine your legal fate.

Prepare for Recent Changes in Foreclosure Law

As a result of the housing bubble crisis of the late 2000s, sweeping reform laws changed the way banks approach home foreclosure. Banks are now obligated to help individuals who cannot pay mortgages, and “fire and forget” foreclosures should now be a thing of the past. Because of these changes, the foreclosure process should be less clear cut, more methodical, and should give you more options for avoiding foreclosure.

Common Questions:

How Long Does Foreclosure Take?

The foreclosure process should take no less than five months; though often the process is longer.

Can I Offer a Short Sale?

Absolutely–short sale is a preferred option for homeowners. However, banks don’t like the idea of not collecting money on a loan they’ve already signed for.
While short sale is a difficult option, it is definitely preferable to foreclosure, and should be explored if possible.

Will I Be Forced to Leave My Home?

If you do not make mortgage payments on your home, then you will be asked to leave. Technically, the property still belongs to the lending institution.

Once I’m Foreclosed On, Do I Still Owe Money?

If the bank sells the home after foreclosure and fails to recoup the value of their investment, then you may be liable for the difference. This sometimes results in lawsuits, in which case retaining legal defense is expedient.

The Law Office of Julio E. Portilla P.C., is always available to answer your questions. Feel free to contact us at: questions@julioportillalaw.com

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