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5 Steps You Can Take To Avoid Home Foreclosure

The prospect of having your home foreclosed on is terrifying, and if you are close to foreclosure you might feel helpless about the situation. Don't fear, however. Even if you are close to foreclosure, there are a number of things you can do that might save your home from foreclosure.

Workout An Agreement

The fact of the matter is, most lenders want to work with you regarding a foreclosure. The reason for this is that it is ultimately within their best interest to do so. By working within the confines of an agreement that works out for both parties, the lender is ensuring that they are going to receive the money that they had originally invested into the home. It is wise to work with your lender to the best of your ability to come to an agreement regarding how to pay back your loan. This will ensure that both parties are happy and you can adequately and sufficiently pay back your loan and interest.

Short Sale

Before your home goes up for auction but after your lender files a notice of default, then the lender must consider an offer from a buyer if you receive one. If a lender does foreclose on your home, then the lender is simply going to turn around and put your house on the market. If the lender sees that there is interest in the home before putting the house on the market, then they may see this as saving them time and money and, for you, this will save both money and a lot of headache regarding foreclosure. It is recommended that you aggressively seek out a buyer for your home during this period of time.


If you file for bankruptcy, this will prevent a lender from trying to come after you (regarding a foreclosure or any other outstanding loan), at least in the immediate future. Since foreclosure does involve a loan, and bankruptcy temporarily "freezes" all loans, then you are going to be bought an ample amount of time to figure out a way to pay back the loans. That is the myth of bankruptcy: that you are essentially absolved from having to pay back any and all loans. The fact of the matter is that bankruptcy allows you to renegotiate how you pay back those loans. It doesn't "free" you from them.

Deed In Lieu

A deed in lieu involves you voluntarily signing the deed of your house over to the bank. This, intuitively, sounds like it would simply be the same thing occurring as having your home foreclosed upon. This is not the case, however, and in many cases, this is a valuable alternative to foreclosure. A lender will be reluctant to buy the deed from the bank for a number of reasons. Many lenders are afraid that the former homeowner will sue them, claiming negligence and being coerced into signing over to the bank on behalf of the lender (despite this ultimately not being with in the best interest of the lender) and many lenders will have to pay a significant amount on a mortgage that has been signed over to a bank to begin with.

Determine If The Deed Is Assumable

This option is, by and large, not available  for most home owners anymore; however, there are some cases where the deed is assumable. This means, essentially that the borrower will agree to pay off the loan to the lender in full whenever he or she sells off the house. The matter is really as simple as that!

If your home is close to foreclosure, you might want to consult with a real estate attorney. He can help you work through a number of these steps, as well as give you more helpful advice for preventing a home foreclosure.