Are you behind on your housing payments? If foreclosure looms, it might feel like all hope is lost. Not so fast. There are a few legal strategies for stopping a foreclosure from going through. Your case will be stronger if you can prove that your financial distress is based on a temporary setback (such as a job loss) that you can recover from in the next few months. But anyone can try to stop a foreclosure in Sacramento.
The first thing to do if you’re trying to keep foreclose at bay is reach out to a professional. This usually means an attorney. They can lay out the possibilities given your specific situation — because not every option is right for every homeowner in distress. Let’s go over the most common strategies for stopping a foreclosure on your Sacramento home.
File for Bankruptcy
Foreclosure is bad for your credit, and you’ll definitely have to abandon your property. Bankruptcy is also bad for your credit, but it may be able to keep you in your home. This option is for people who find it most important to stay in their current home. If your foreclosure is imminent, filing for bankruptcy is a last ditch effort that just might work. A bankruptcy initiates an automatic stay in your foreclosure case, and you can’t be removed from your primary residence during this time. Keep in mind that your lender may file to have the stay removed — but you’ll definitely buy yourself some time, erase other debts, and you may be able to use this time to negotiate with your lender based on your new debt to credit ratio.
Ask for a Loan Modification
If you start a loan modification application, the bank may also be stopped from proceeding with the foreclosure. In California, a bank cannot dual track. That means they can’t go forward with the foreclosure while a loss mitigation application (your loan modification) is also in progress. The best news is that if your loan modification is approved, your mortgage will be brought current and you’ll probably have lower payments thanks to extending the terms of the loan. You may also be granted a lower interest rate.
Try a Short Sale
If you can’t modify your loan and bankruptcy isn’t the right choice, a short sale may be your best option. This is a sale in which your lender agrees to accept less than the outstanding balance on your mortgage. If you have equity in the property, it won’t be an option. But for underwater homeowners, a short sale is often the best way to stop a foreclosure from proceeding. You won’t reap any windfall from the sale, and short sales temporarily harm your credit, but it’s better than a foreclosure. Many people who go through a short sale are able to get approved for a new mortgage within two to three years.
Sell to an Investor Fast
Are you starting to fall behind on your monthly housing payments? Your best chance at stopping a foreclosure might be selling before your bank has a chance to officially file. You can stop foreclosure before it starts by selling the property as-is in an all-cash sale that doesn’t require the typical contingencies, inspections, and escrow period. A company like California Family Homebuyers can turn around a sale as fast as seven days in some cases. If you know you’re about to run into trouble, call us today so we can stop a foreclosure from hitting your credit hard! We accept homes in all sorts of conditions around Sacramento, so don’t hesitate to reach out if you have a fixer upper.