Stop Foreclosure...Now and Forever

Foreclosure is what happens when you default on your mortgage. If you do not make your mortgage loan payments, the bank will repossess your real property to keep from loosing money on the deal.

You agreed to this when you signed your promissory note, which is secured by a mortgage lien on the property. Most foreclosures take time, so lets take a look at a few things you can do to try to prevent your foreclosure.

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If you find yourself unable to make your mortgage payment, you should contact your lender immediately and let them know your payment will be late.

If you are already 2-3 payments behind and you will have the ability to make these backed payments, you can try a strategy known as reinstatement. This is when you make one lump some payment to bring you current on your loan payments.

Forbearance is the act of postponing your mortgage payments for an agreed amount of time. Reinstatement and Forbearance are usually used in combination.

Many people change their mortgage terms. This is when you may regain the ability to start paying your mortgage, but still lack funds to make your past due payments. Some lenders will extend the length of your loan to cover the missed payments and stop foreclosure.

Of course for many people the best route is to sell their house. Some lenders will agree to not file foreclosure in order to give you time to sell the property.

The FHA (The Federal Housing Authority) offers insurance to prevent foreclosure. If the lender is able to get this service, you will have to sign a promissory note to allow the Department of Housing and Urban Development (HUD) to put a lien on your property (on the mortgage). The loan has to be repaid on the sale of the property, or when the mortgage is paid off.

Keep in mind: lenders do not want you to go into foreclosure, and even with all these programs available many people still fail to prove that they will be able to make their payments from that point forward. The lender will require two things...

• Your Income Statement
• Your Balance Sheet

These two reports together will show your cash flow pattern, and your money management skills will be obvious to anyone who can read the numbers and understand what they are saying.

Primarily, your lender will check to make sure you have enough positive cash flow every month to make your payments. He will also be interested in your income to debt ratio (and you should too...)