6 Tips to Consider When Faced With Foreclosure
By Alan L. Olsen, CPA, MBA (tax)
Greenstein, Rogoff, Olsen & Co., LLP
Many find themselves faced with foreclosure in the world today. Sometimes the circumstances leading to foreclosure isn’t your fault. If faced with foreclosure, most likely you want to know what to do, how to get help and if you can get out of it. Each situation is unique; to help those faced with foreclosure we’ve assembled a list of 6 helpful tips.
1) Talk With Your Lender Now
Talk with your lender now and be honest about your situation. The sooner you make this appointment, the more options you’ll have. Look at the possibilities of making interest-only payments for a while, or refinancing your loan. Lenders are willing to help because generally they lose profit on foreclosures and would prefer to work out an agreement instead of taking your house.
Within hours of being notified that your foreclosure is beginning you will be getting phone calls. Be wary of false consultants. Never sign the deed of your house over to someone else or allow them to speak with the bank on your behalf.
3) Chapter 13 Bankruptcy
You could file Bankruptcy chapter 13. Here you will be able to keep your home and other possessions under the supervision of the court. You will then be given a specific time period to pay the debt accumulated.
4) Sell the Property
This should only be resorted to if you are able to sell the property for more than you owe the lender. This needs to be done before the lender auctions your house.
5) Short Sale in Lieu of Foreclosure
Upon agreeing with the lender you can quickly sell your house for less than you owe. Be careful to clarify all details connected with this agreement because some banks will expect to be paid in full even in if you are making a short sale agreement.
6) Second Mortgage
Sometimes you will be given the option of taking out a second mortgage. Do not be lured into this trap. Interest rates are extremely high, sometimes up to 17%. More than likely you will just exhaust your resources with this option.