Foreclosure is the legal process that allows lenders to legally claim real estate as compensation for a mortgage in arrears. When people fall behind on their payments, their lenders may begin the complex legal process of foreclosing on the property.
Homeowners are at risk of losing the equity that they have accrued and the home where they have long lived in a matter of months due to temporary financial hardship. There are several strategies that can help people defend against foreclosure proceedings, with the three below being among the most common.
1. Requesting a modification
Mortgage lenders can agree to execute new paperwork to change the terms of a mortgage. They can increase the repayment timeline, which may decrease monthly payments. They may allow borrowers to lock in lower interest rates. They may even agree to the repayment of missed mortgage payments at the end of the mortgage instead of immediately. Those changes can make the mortgage more sustainable for the homeowner.
2. Highlighting procedural errors
Lenders must provide advance notice of the foreclosure attempt and must follow very strict guidelines throughout the process. In scenarios where accounting or communication errors arise, property owners can potentially defend against foreclosure by pointing out the technical errors made by the mortgage lender.
3. Filing for bankruptcy
Bankruptcy can temporarily halt foreclosure through an automatic stay. Eliminating certain debts can make it easier to keep a mortgage current, and lenders may have more reason to modify a mortgage during the bankruptcy process than after an informal request by the borrower.
Reviewing potential foreclosure proceedings and financial records with a skilled legal team can help people determine the best strategy for protecting what may be people’s most valuable asset. An attorney can help those facing foreclosure evaluate their options and take necessary steps to protect their home equity.