Steps to Avoid Foreclosure When Selling My Home | By Alberta Buyers
What do I do if I’m forced into selling my home but I want to avoid foreclosure? Can foreclosure even be avoided when experiencing financial troubles? Surprisingly, the answer is usually, “Yes you can avoid the legal process which strips you of your home!” Whether the end result is that you can or should stay in the home is another question. After attempting the steps to avoid foreclosure, you will be in a better position to make that call.
What are the steps to prevent foreclosure?
Seek help early – Avoiding the problem will not make it go away. The earlier you seek help, the more options you have.
Face the facts – Open your mail and respond to correspondence from your lender. If you are in a home that you can no longer afford, realistically assess whether you need to move on.
Muster your resources – Sell what don’t need that has value–a car, jewelry, household goods, etc. Try to find a second job, prioritize your spending, and see whether your family or friends will lend you money. This may seem obvious, but your effort will show your good faith to the lender.
Contact your lender – If you alert your lender of a problem, they might have programs to help, including “forbearance” (that gives you time to make up the payment, forgiveness of payment, a repayment plan, or loan notification).
Consider outside help – Housing counselors can review your situation at no cost, help you consider your options, and even negotiate with your lender. They can direct you to federal, state, or local programs. You can get started by calling the Alberta Buyers Hotline at 403-879-2502 and tell them “I need help selling my home and avoiding foreclosure!”
Look for programs that can help. Making Home Affordable, the main federal attempt to prevent foreclosure, may be the first program that comes to mind to help you obtain a loan modification if you meet the criteria. Since its inception in 2009, the program has expanded. It can address second mortgages, underwater situations, and more. Within Calgary area, the Home savers Program can help unemployed homeowners.
Avoid scammers – Housing counseling to avoid foreclosure is free, but many private companies have sprung up claiming they can help you. Often these companies request high upfront fees, may take the title to your home, and don’t do as they promise. Always work through a certified housing counselor.
Need or want to move on? Here are your alternatives:
Selling my home – If your home is in good condition, and your Realtor feels that it would command a good price in view of comparative sales figures in the neighborhood, you might consider trying a conventional sale. This might net you enough money to pay back any past debt to your lender or at least relieve you of a payment that is too high.
Consider a short sale – If your home is worth less than you owe, a short sale might be the way to go if your lender will negotiate. This will impact your credit, but not as much as a foreclosure. The process also offers you more control over your situation and saves your lender the much-higher costs of foreclosure.
Consider a deed in lieu – You can also deed the home back to the lender in return for cancellation of the mortgage. The lender will cancel the foreclosure and might even let you stay in the home until you find a place to move.
Sell my home to a third party – Companies that buy houses are equipped to move quickly to prevent your home from slipping into foreclosure.
With the help of your counselor, you may realize that you are too far behind on your payments, the home needs too much work, the payments are too high, or your home has lost too much value. Your housing counselor can help you make the transition, but you will have to give up your home. This may be hard, but will stop the foreclosure and you will then be able to move on to the next stage of your life.
If you have worked with a housing counselor, what was your experience?