Mortgage Foreclosure: How to Avoid Losing Your Home

Get help with your mortgage problems as soon as you are aware of any problems with the company handling your mortgage. 
 

To avoid losing your home in a foreclosure, you have several options:

1. Try to sell the home
    Put your house on the market and try to sell it, pay off the mortgage, and hopefully net the remaining proceeds for yoursel. 
   If you get an offer that does not pay off the entire mortgage balance, you can apply to the mortgage lender for a “short sale.”
2. Try to buy back your position
   Come up with a lump sum that the mortgage company attorney will accept to reinstate the mortgage. This amount will be not only the past due payments, but also taxes and insurance that the mortgage company had to pay, and additional court costs and attorney's fees;
3. A “deed in lieu of foreclosure” is another type of loss mitigation where the mortgage servicer agrees to take a deed from you in full satisfaction of the mortgage debt.  This has a slightly less negative affect on your credit than a foreclosure judgment, and would prevent the mortgage servicer from trying to collect any deficiency still owed after the house is sold.  

4. Loan Modification
   Apply to the mortgage servicer for a loan modification. The monthly mortgage statement you received should have a telephone number for you to call to request an application for a loan modification. If you do not receive a monthly statement, check your tax records for the end of the year statement or contact your servicer.  Legal Aid may be able to help you find and contact your mortgage servicer.  There is no cost associated with applying for a loan modification or other loss mitigation options.  Legal Aid can assist you in applying for a loan modification.

5. File a Chapter 13 bankruptcy to catch up on all the arrearage due.
   You cannot file a Chapter 13 bankruptcy to stop the foreclosure unless you have regular monthly income. Your income from unemployment may be enough to allow you to file a Chapter 13 bankruptcy to save your home from foreclosure. However, whether this is realistic depends on how many more months of unemployment benefits you have and whether you will be able to get a job before your unemployment benefits run out.
   A Chapter 13 bankruptcy would allow you to pay out the arrearage due on the mortgage over 3 to 5 years. During that time you would have to keep up the regular mortgage payments as well. You can file a Chapter 13 bankruptcy to stop the foreclosure any time until the confirmation of the Sheriff sale.

   A Chapter 13 bankruptcy is more costly for you and more time-consuming than applying for a loan modification, so we suggest that you apply for a loan modification first.  Under a Chapter 13 bankruptcy you would have to begin paying the regular mortgage payment plus an additional Chapter 13 plan payment to the Bankruptcy Trustee every month to catch up on the mortgage arrearage.  A Chapter 13 bankruptcy can be filed until the day before the confirmation of the Sheriff’s sale.  Legal Aid may be able to represent you in a Chapter 13 bankruptcy.
   The other option is to file a Chapter 13 bankruptcy. This option is more costly for you and more time-consuming than applying for a loan modification, so we suggest that you apply for a loan modification first.  Under a Chapter 13 bankruptcy you would have to begin paying the regular mortgage payment plus an additional Chapter 13 plan payment to the Bankruptcy Trustee every month to catch up on the mortgage arrearage.  A Chapter 13 bankruptcy can be filed until the day before the confirmation of the Sheriff’s sale.  Legal Aid may be able to represent you in a Chapter 13 bankruptcy.

6. Remain in the house until conclusion of the foreclosure process.
   The Court will eventually grant a judgment of foreclosure. Once the Journal Entry of Judgment is filed in the case, the date for the Sheriff’s sale of your home will be set for at least 30 days after the judgment.  You will be able to remain in your home until the date of the confirmation of the Sheriff’s sale, which will take place at least ten days after the sale.  You will get notice of the date of the Sheriff’s sale and of the date for the confirmation hearing.