7 Urgent Ways to Stop Foreclosure Immediately

Buying a home is one of the most decisive investments people make. Facing the prospect of losing it in foreclosure is, therefore, understandably distressing. The good news is that you can stop a foreclosure and save your home, or at least come out with some kind of victory.

Do you want to learn how to stop foreclosure with immediate effect? Below are seven ways to stop foreclosure immediately:

1. File for Bankruptcy

You can stop a foreclosure by filing for bankruptcy. This will grant you an automatic stay, which means the foreclosing party is barred from proceeding with the process. As long as the “automatic stay” is in force, the bank won’t touch your property. This stay is some sort of an injunction barring the bank from foreclosing on your home or collecting its debt from you. A stay stops the foreclosure in its tracks.

The foreclosing party may choose to file a “motion for relief from the stay.” This is an attempt to get the courts to lift the stay and proceed with the foreclosure process. Even where such a relief is granted, you have at least a month or two before the bank can proceed. This duration buys you time to consider other alternatives.

2. File a Lawsuit

Filing a lawsuit is another way to stop foreclosure immediately. You can stop a foreclosure by filing a lawsuit against the “bank” (the foreclosing party). While you don’t have a guarantee that the lawsuit will succeed, filing for one at least delays the foreclosure, which could be all the time you need to save your house. This option won’t work where foreclosure is judicial since the case has already been litigated in court and ruled against you. Unless you are appealing a judgement to foreclosure your home, suing your bank is not a wise move.

For the lawsuit to sail through, you must provide the court with credible reasons why the foreclosure should stop. Among these include the possibility that the bank violated the mediation requirements. It may also be that the bank cannot prove ownership of the promissory note.

One can stop a foreclosure if one can prove that the bank violated relevant laws or failed to follow due process. Unless you are certain of your chances with a lawsuit, avoid it as the process can be very expensive. You might also be forced to pay for the bank’s attorneys’ fees and other related costs.

3. Apply for Loan Modification

This option demands that you act early instead of waiting until the last minute. By the time your home comes up for foreclosure, you know you need help. Loan modification could delay the foreclosure process, or help you avoid it altogether.

A bank may be restricted from dual tracking. This means that the bank may be stayed from proceeding with the foreclosure until a loss mitigation application is concluded. The good thing with a loan modification is that it stops the foreclosure permanently as long as you stick to the modified payment terms.

4. Request for a Postponement of the Sale

To forestall a foreclosure, request the servicer to postpone it. While the chances of a servicer agreeing to your request are slim, you won’t know if you don’t ask. You might just be pleasantly surprised.

5. Apply for First-lien Loss Mitigation

Once you have applied for first-lien loss mitigation, a servicer is duty-bound to deny or grant it before foreclosing your home. However, there’s a deadline for submission of this application, outside of which the provision won’t apply.

It’s always a great idea to consult a lawyer to establish what the specific deadlines are. Again, an application for first-lien loss mitigation is not guaranteed to succeed, but it buys you time to explore other options.

6. Go for a Short Sale

If you’ve run out of options, how about selling the home instead? Should you get an offer for your home before it goes under the hammer, the bank will have to consider it.

After all, their interest is to recover their money, not to punish you. In any case, foreclosing means the lender will put your home on sale. Selling it yourself takes the headache and the related marketing expenses off their hands.

7. Apply for Deed in Lieu

There is a provision that allows you to sign over ownership of the home to the bank and avoid foreclosure. While, on the face of it, this seems like a stroke of genius, it is not, and most banks would politely decline. First, it has the same impact on your credit as does a foreclosure. Second, rarely would a lender agree to repossess your home via a deed in lieu of foreclosure.

They fear you might later claim you didn’t understand what you were getting into. Besides, by agreeing to this option, the bank is obligated to pay off HELOCs or second and third mortgages for a deed in lieu to take effect. For a lender to agree to this arrangement, you must be in severe financial trouble.

It’s always a great idea to consult an attorney when facing imminent foreclosure on your home. Whatever you do, exhaust all possible options before the foreclosure proceeds.