Avail the alternatives of Foreclosure to accomplish your tasks in hassles-free way

Foreclosure is a legal right of a mortgage holder or other third-party lien holder to sell the property and use the proceeds to pay off the mortgage. This legal right has a long history and became especially widespread during the current real estate bubble in North America and Europe. Some of the experts also consider foreclosure to be one of the main reasons of the current Mortgage Crisis. Foreclosure can be initiated at anytime after default on the mortgage and there are two main types of foreclosure: foreclosure by judicial sale, foreclosure by power of sale. 

Foreclosure will be present in your credit history and it will be actually very damaging for your creditability, so there are ways to avoid this procedure. Of course foreclosure has some alternatives but before you try any of these methods you should talk to your lender and check if you qualify for any of these alternative measures. A housing counseling agency can assist you in negotiations with lender. Also a housing counseling agency can help you in determining which alternative options meet your needs.

There are following types of foreclosure alternatives available:

Special Forbearance

If you have experienced a reduction in income or an increase in living expenses you may negotiate a modified repayment plan with your lender. If you provide your lender with information on your financial situation, he or she may agree to provide you with a temporary reduction or suspension of your payments. But remember that this alternative will probably require good written statements.

Mortgage Modification

In case you have just recovered from a financial problem and can’t afford the current payment amount, you have the possibility to refinance the debt and/or extend the term of your mortgage loan. If everything goes well you can lower the monthly payments to a level when you can afford them.

Partial Claim

If you are able to make full mortgage payments but you have a mortgage debt, you can work out a one time solution. A payment from FHA-Insurance fund could bring you to your mortgage current. But you need the help of your lender to qualify for this one time payment.

Pre-foreclosure sale

You can sell you property for an amount less than the amount necessary to pay off your mortgage loan. At some points the pre-foreclosure sale can be more of a business that an alternative. If the amount that you receive from selling property is more than you need to cover the mortgage loan, the whole scheme can be used to make profit. This is considered by many experts to be one of the reasons of the ongoing mortgage crisis.

Deed-in-lieu of foreclosure

There is also a last possibility to voluntarily "give back" your property to the lender. You will lose your house, but you will keep you credit rating. You can qualify for this alternative if you are in default and don't qualify for any of the other options or if you failed to sell the house before foreclosure.

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