So you’ve received a foreclosure notice in the mail. This can understandably be scary. Though we know that landlords have more power than tenants when a home is rented, we often assume that once we become homeowners it’s harder for us to lose the home in which we’re living. But to a certain degree, landlords are sometimes under more obligation than lenders. For example, California requires that tenants in a fixed term lease must be informed by a landlord before the end term of the lease if the landlord does not plan on renewing said lease; usually with about 60 days’ notice. If a landlord doesn’t follow these rules, the tenant can often work with tenant attorneys to defend their rights.
A lender can simply notify a homeowner through the mail that they are facing foreclosure, usually after four missed payments. However, you still have rights, and there are strategies that you can undertake to stop or delay a foreclosure. At the very least, this can give you time to sell your home in order to pay off your debts and avoid the credit damage that a foreclosure can cause. At most, it can allow you to get back on track and keep your home. Let’s explore some of those strategies below.
1. File A Lawsuit
One of the strongest means through which you can attempt to stop a foreclosure is by working with a foreclosure attorney to file a lawsuit. This isn’t an option in all cases, but if your bank is attempting to foreclose the home outside of the court system, you can attempt to file a lawsuit in order to stop or delay the foreclosure.
Now, you will need to prove to the court that the bank should not be able to proceed with the foreclosure. This could involve proving that the bank cannot provide a promissory note, which would mean that the bank can’t prove that it essentially owns the home. You could also prove that the bank didn’t comply with state mediation requirements. Foreclosure attorneys sometimes move to prove that the bank didn’t abide by state laws when proceeding with the foreclosure, didn’t follow the legal steps when proceeding with the foreclosure, or made some kind of serious error.
All of this is rather challenging to prove, which is why you should contact a law firm before attempting to handle the process on your own. Honestly assess whether or not you have a realistic case.
2. Request A Loan Modification
Sometimes, rather than pursuing a lawsuit, your foreclosure attorneys may recommend that you request a loan modification. You can’t wait until the last minute with this option, and you need to move forward with it as quickly as possible. Asking for a loan modification may delay the foreclosure because the bank in question may be restricted from dual tracking. Dual tracking means that a bank is moving forward with a foreclosure while a loss mitigation application is pending, and this isn’t always allowed. Certain states prohibit dual tracking entirely, including California, Colorado, Nevada, and Minnesota.
If your loan modification request is approved, you’ll have essentially stopped the foreclosure entirely. As long as you continue paying off the loan under the modified terms, you won’t need to worry about your home being foreclosed upon any longer.
3. File For Bankruptcy
There are a lot of issues that can cause you to file for bankruptcy. But a lot of homeowners file specifically to avoid stop a foreclosure sale. This can still damage your credit, but you would be able to avoid the foreclosure sale. The automatic stay will stop the foreclosure even if the sale is meant to take place the next day. Usually, the foreclosure will be delayed by at least a month or two as you attempt to negotiate your bankruptcy terms.
If you’d like to keep your home, you may want to consider Chapter 13 bankruptcy. But if you simply want to delay the foreclosure, Chapter 7 bankruptcy may be a better option.
When working with a foreclosure attorney, you won’t immediately solve all your problems. But you can give yourself options that will help you in the long term, and offer you different choices for your future.