Losing Your House to Foreclosure

Losing Your House to Foreclosure

According to a Black Knight’s report published in October, home equity may not save some borrowers in forbearance from losing their house to foreclosure despite record-high home prices. Since 2010, around 10% of borrowers with more than 120 days in delinquency found themselves in foreclosure, regardless of their equity.

However, in a report published last month, Black Knight showed that of homeowners still in forbearance as of mid-August, 98% have at least 10% equity, compared to 28% during the last downturn. Moreover, according to the new data, high-equity borrowers are around 40% less likely to lose their homes to involuntary liquidation, such as short sale, foreclosure sale, or deed-in-lieu.

However, 30% of these mortgage holders lost their homes, meaning they are not selling their property when needed.

Ben Graboske, Black Knight’s data and analytics president, said in a statement that the reason for not selling the property is unclear. “Given the large number of high equity homeowners currently struggling to make their payments, this represents a significant challenge for the industry: how to educate struggling homeowners on the post-forbearance, foreclosure, and – if needed – home sale processes to limit unneeded stress on homeowners and the market alike.”

How to Avoid Losing Your House to Foreclosure

If you’ve fallen behind on your mortgage payments due to a hardship such as job loss or divorce, and you’re facing the possibility of foreclosure, you’re not alone. The good news is that you can do things to stop a foreclosure. If you are having trouble making your mortgage payments, the first thing you should do is contact your lender. Communicating with your lender creates an opportunity for you to create a plan, which may include one of these four ways that can help stop foreclosure:

Apply for a Loan Modification

Loan modifications are when the lender agrees to adjust the terms of your loan to lower the payment, rate, loan amount, or some combination of these factors to make the loan more affordable to you.

File for Bankruptcy

Bankruptcy stops a foreclosure as soon as you file for bankruptcy. There are two kinds of bankruptcy:

  • Chapter 7 is when you discharge your debts, meaning that you don’t pay them back if you qualify for this kind of bankruptcy.
  • Chapter 13 is when you restructure your debt and get on a payment plan and may enable you to keep your home because your mortgage can be included in the payment plan.

Short Sale Your Home

If your hardship scenario will be longer-term and you know you can’t keep your home, you can apply for a short sale with your lender instead of just waiting for foreclosure. But this scenario is only applicable to homeowners who owe more than their home is worth.

Ask for a Deed in Lieu of Foreclosure

A deed in lieu is when you voluntarily sign the deed to your home back to the bank. It seems like an easy option to avoid foreclosure, but lenders rarely grant it because they bear too much legal risk that the borrower can sue them later.

Contact a professional real estate investor

You may want to sell your home fast to get out of the problem or save your credit rating. Styl Properties, Inc. is here to help homeowners out of any distressing foreclosure situation.  There are no fees, upfront costs, commissions, or anything else.  Just the simple truth about your home and how we can help you sell it fast to resolve any situation.

Give us a ring. We would love to help you understand the process and answer all of your questions. You can reach us at 402 999.0577

Photo by Matt Moloney on Unsplash I

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