Need More Time? How To Stay in Your House Longer and Avoid Foreclosure

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Falling behind on payments is not a very uncommon occurrence anymore and as homeowners watch their home literally slip through their fingers, there is little time to figure out what to do in the long run.  But with some careful strategy, there is a way to buy some more time so you can figure out how to manage the situation and maybe even avoid foreclosure in the first place.

Here are three steps homeowners can take to gain additional time prior to the foreclosure process:

1. File for Bankruptcy Relief

If you have fallen behind on your payments, it is safe to say that you are experiencing a financial crisis of some sort.  Whether as a result of job loss, change in ability to work, downsizing, divorce or death in the family or changes in your health affecting your ability to earn the same as before – something will need to be done to rectify the situation.  While filing for bankruptcy protection will not change your foreclosure proceedings from going forth once the bankruptcy process is complete – it will give you time to step back and consider all options and how to proceed.  During the bankruptcy filing and until it is final – all foreclosure processes are put on hold.

2. Request State Mediation

Most states have a mandatory mediation statute that gives homeowners and avenue to dispute or at least ask for verification that the lender has the authority to file foreclosure on the property. In fact, lenders are required to provide the homeowner with an application for mediation along with the notice of default action.  Though there is a fee involved (ranging anywhere from $300 to $3000 depending on how you pursue it) you will automatically buy about three months’ time, giving you and your family a chance to cope with the situation and establish some alternatives.  The added breathing room comes from the time it takes to receive a response once an application is sent to the agency managing your mediation request.

An added advantage of the mediation process is that the lender’s representative may very well assist you in coming up with other alternatives and depending on your situation, work with you to pursue a loan modification.  This could help you avoid foreclosure and be able to hold on to your home.  If that is not an option – you can also seek additional time to pursue a short sale.

3. Talk to the Lender

The department handling foreclosures at the bank is used to seeing many distressed homeowners and may assist you in exploring other avenues, especially since banks do not want any more foreclosure properties on hand than they have to. If anything, you may be able to get approval to put your home on the market for a short sale without having to spend the money needed to apply for mediation.
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Unbeknownst to many homeowners in financial strife and facing foreclosures, their Realtor is a great resource of information, support and references to other people that can provide the same relief.  Be sure to consult with your Realtor to find out what avenues they can assist you with during this very difficult but manageable situation.