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Taking steps to avoid foreclosure

Individuals in Washington, D.C., who are having difficulty making mortgage payments might be interested in a recent article discussing different ways to avoid foreclosure. While the process of losing the home may seem inevitable after a creditor issues a Notice of Default, it could still be possible to enter into negotiations with the lender.

One option that might be open to some individuals is a short sale of the home. Because the foreclosure process eventually results in the sale of the property to a third party, the short sale option might be attractive to the lender and could provide certain benefits to the homeowner. Another strategy involves negotiating a deal with the entity that issued the mortgage. Lenders often prefer to draft a workable agreement rather than enter into the process of foreclosing a property.

In some cases, the process of transferring liability for the loan to a third party might be a solution. While many contracts include clauses that require homeowners to pay off their mortgages in full when their homes are sold to others, some lenders might allow new owner to modify the mortgage contracts and assume responsibility for the loans. A consumer might also pursue a lease-option, which would involve renting the home to another party and using the lease payments to make mortgage payments.

Another option involves filing for bankruptcy. A bankruptcy filing results in protections that bar lenders from engaging in collection activities, including foreclosure, against the filer. However, bankruptcy may be a complicated process that might involve working with a mediator and the involved lenders to pay off as much of the outstanding debts as possible. The advice and guidance of an attorney who is familiar with bankruptcy proceedings might help an individual protect his or her rights throughout negotiations and hearings.

Source: Frontdoor.com, "5 Ways to Stop the Foreclosure Process", Tara-Nicholle Nelson, July 14, 2014

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