Avoiding Foreclosure

by Hemlata, AVP, Lending & Real Estate

Home foreclosure stories seem commonplace these days. However, foreclosure isn’t your only option. Avoiding foreclosure let’s you keep your good credit history, provides tax benefits while repaying your mortgage loan, helps you avoid potentially hefty tax obligations and puts you in control of your financial future.


What is a foreclosure?

To purchase a home, consumers typically obtain a mortgage loan. Your lender receives a security interest in your property in exchange for providing the money to buy the house. If the buyer doesn’t repay the loan, the lender has the legal right to foreclose on the home and take possession. They may sell or auction the home and use the money to recover all or part of their loan.


If the subsequent home sale does not recover the full loan amount, a civil court judgment may be pursued against the borrower. The deficiency balance judgment allows the lender to recover the cash through various means. It’s important to educate yourself about foreclosure laws in your area. It’s not as easy as walking away. As the borrower, you may still have financial obligations and tax exposure. Plus, foreclosure will affect your ability to buy a home in the future.


There are other options than foreclosure. Consider refinancing your loan, modifying your loan terms, selling or short selling your home.


Here are some steps to help you avoid foreclosure:


Speak with a non-profit credit counselor.

Professional credit counseling services can start you off on the right foot. A counselor can help you establish a budget to prevent overspending. They also may be able to negotiate with all of your lenders on your behalf to lower interest rates or payments and helping to make your mortgage payment more affordable.


If your current home loan is unaffordable, speak with a HUD-certified housing counselor. These mortgage experts can explain your options.


You should never pay an up-front fee for credit counseling services.


Contact your lender.

Take control of your situation. If you know that you can’t make your mortgage payment or you are struggling to make ends meet, take action now. The sooner you act, the more time you have to resolve your situation.


Don’t hide. Take calls from your lender and fully explain your situation. Your lender doesn’t want your house, they want your payments. Show them you’re making an effort toward repayment and ask for options.


If you’re having difficulty making payments on a first or second mortgage loan with us, call one of our specialists for help. To determine the best possible way to assist you, we will review your financial situation. Complete a Financial Worksheet and fax to (925) 296-6502. After this information is received and reviewed, we will work with you to find an appropriate solution.


Selling your home.

If you have decided to sell your home and you owe more than its market value, contact us to evaluate your options. Evaluating the risks and benefits of short sales, debt restructuring and foreclosure and matching the best option to your situation is essential to your financial future.

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