5 Possible Foreclosure Defenses

5 Possible Foreclosure Defenses

For many, there’s no greater accomplishment than owning a home. On the same note, losing your home through foreclosure can be demoralizing and embarrassing, leaving families in financial ruin. If your North Carolina home is at risk of foreclosure, there are several defenses you may pursue to avoid it.

1. Loan Modification

Loan modification is an option to explore as soon as you know that foreclosure is on the table. This requires the lender and the borrower to come to an agreement regarding new loan terms. You may be expected to present proof of your budget, how much you can afford, and your ability to pay moving forward. The process can take several months, which is why it’s crucial to apply as soon as possible.

2. Reinstating the Mortgage

If you hit a financial rough patch but you’re confident in your ability to continue making your current payment going forward, you may be able to reinstate the mortgage. This involves bringing the mortgage current by paying all past-due payments, as well as all fees and administrative costs. This right is not guaranteed under North Carolina law, so it’s important to check the terms of your home loan before putting thousands into a past-due loan.

3. Short Sale

While a short sale can be damaging to your credit, it is nowhere near as harmful as a foreclosure. In a short sale, the bank agrees to sell the home for less than you currently owe. Depending on the terms of the agreement, they may forgive the remaining balance of the loan or they may require you to pay it over a period of time. This may be a viable option if you are unable to afford your home payments and you simply need to go back to renting.

4. Deed in Lieu

Deed in lieu is a process during which the homeowner transfers the deed of the home to the servicer when they are no longer able to make payments. The deed is signed over in place of mortgage payments. While this option does not allow you to keep your home, it may help you limit the costs and fees of foreclosure.

5. Bankruptcy

If you file a Chapter 13 bankruptcy, you may be able to avoid foreclosure and keep your home. Under this type of bankruptcy, borrowers can repay their arrears over a period of up to 60 months. The court must approve your plan. And if the court does approve it, the mortgage company has to live with it—this factor sets this option apart from a loan modification.

As you look for ways to keep your home and avoid foreclosure, you may begin to consider bankruptcy as an option. Get the support and advice you need with Blossom Law. Set up a consultation today by calling (704) 271-9078.

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