Unfortunately, foreclosures are quite common in today’s real estate market. Hopefully this article will give you the information you need to better educate yourself about foreclosures. If you are facing foreclosure or know someone going through foreclosure in the Lehigh Valley, our hope is that this article will help in some way. This information will allow you to correctly assess your situation and take the best course of action.
What is a foreclosure and how does it happen?
A foreclosure is when the lender works to recover the balance of an unpaid mortgage. This usually happens when the borrower has stopped payments to the lender. The lender will then force the sale of the home to cover the balance of the mortgage.
One of the main reasons foreclosures are happening is because of the mortgage crisis. The mortgage crisis came about by unfair lending practices and unrealistic loans that almost anyone who wanted a loan, could receive. Even in the Lehigh Valley the type of loans offered at the time were subprime loans. Subprime loans had high interest rates, and were on adjustable terms. These were usually offered to people with bad credit who normally would be denied under normal circumstances. When the interest rates rose their adjustable payments rose with them. This caused many homeowners to be unable to afford their monthly payments.
Unwise lending requirements combined with falling house values, and staggering unemployment levels, are the cause behind the current housing market crisis. Business insider recently wrote an article about how “this new batch of properties entering the foreclosure process could threaten to destabilize the market once again.” One of the biggest increases was seen in Pennsylvania.¹
Regardless of the cause or current situation there is still hope. Thankfully, there are several ways to stop a foreclosure.
Three ways to stop a foreclosure
If you realize that you are going to miss a mortgage payment, immediately contact your lender and inform them of your current financial situation. They may give you the extra time you need to get your financial situation back on track. Don’t wait to call until you miss a payment, this will make it much harder to keep the process of an actual foreclosure from starting.
If you already missed a payment, you may want to ask for forbearance. This will delay payments for a short period of time. If you know that you will have more funds to use at a later date, the lender will not require your payments until then, fully knowing that the outstanding monthly delinquency will be brought current on that date.
If you have short-term financial struggles that prevent you from paying your mortgage you could ask for a repayment plan. A repayment plan is when a lender will allow a certain amount of your missed payments to be added to future months payments. This could give you the breathing room you require to pay off the expense and correct your financial course.
What to do if you or a loved one is facing foreclosure
Just remember that your situation is not without hope. Although often overlooked, your attitude towards the situation can greatly affect the outcome. Acting quickly and with good information on your side is one of the best ways to approach circumstances such as a foreclosure.
Here at ZecLee Properties we encourage you to contact a professional before youl pursue one of the aforementioned methods. This way they can personally evaluate your situation and create a backup plan.
Contact us today to see how we can help.
¹ http://www.businessinsider.com/us-foreclosure-starts-2012-6