You may have to agree that the missing documents are indeed lost but there is the what-if someone produces the legal document later say, after the loan is paid off or the home resold; this can create a clouded title.

You could find that the party trying to foreclose your home is not entitled to because they do not have the correct documents to do so.  They may not even own the loan they are foreclosing.  You have to make a request for proof of ownership before the foreclosure takes place.  (See handbook for exceptions).

The lending industry has had major influence on legislation regarding the lending industry.  Naturally, they have provided all sorts of remedies for problem borrowers.  There are scant breaks in the laws for borrowers. Even if the lenders make blatant errors they can simply disclose this and make restitution “if they are caught”.

You can obtain an easy to read government document at : Truth In Lending Comptroller’s Handbook

This article is for informational purposes only and is not intended to provide legal advice.  Should you wish to act on any information provided here seek out the advice and counsel of an attorney in your State.

Leslie J West wrote this article and you can check back for updates to Stopping Foreclosure

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1) If you sell before foreclosure the sales contract will immediately stop the foreclosure process, since what the lender wants is the money that they have loaned you during your mortgage loan agreement. If you sell before foreclosure and your house is already being auctioned, the sales contract will immediately hold the bidding and it will not be sold to anyone at the auction.

2) Another reason to sell before foreclosure is that you could sell your house or your real property for the current market value. This means that when you get to sell before foreclosure you would be able to pay the bank and still have some money for you to save or use for the down payment for your new prospective home. This is hitting two birds with one stone, being able to pay your lender or the bank solves your foreclosure problem, since this is your main reason to sell before foreclosure and having the extra money from the sales of your house or real property is a big bonus.

3) Protecting your credit is another reason why you should sell before foreclosure. If you house or your property has been foreclosed surely this will have a big effect on your credit record. Large points will cause your credit to change dramatically from good to worse. If you have a bad credit then you want to purchase a home or perhaps a car you would be required to make a large down payment and will have higher interest rates than the usual interest rate. Another effect of a foreclosure in your credit is that you will have a difficult time in getting a decent credit card with decent interest rates. Though there are special credit cards for those with bad credit record, however this credit card is more like a prepaid credit card, then the credit limit will not be the same as a normal credit card. So, if you sell before foreclosure you would be able to avoid all these hassles and more importantly you will not get a bad record on your credit since the creditor could not tell if you are currently under the foreclosure process then you would be able to get another mortgage easily if you sell before foreclosure since you will not have a bad record in your credit.

4)When you sell before foreclosure you will not be asked to vacate your previous house immediately, you will be given an ample amount of time to move out. Usually most sales contract will give the previous homeowners 30 or 60 days to move out. This way, the previous homeowners will have time to pack up, how they will transfer their things and furniture, previous homeowners will have time to sort out their next move, make proper arrangements in terms of their new home, and gather their monetary resources.

By all means if you can sell your house before foreclosure do so. Your lender may even accept a short sale of some amount to facilitate the sale. The faster you can solve this default the sooner the damage to your credit will stop. Missed payments will cause points to be lowered but a foreclosure will hurt more for a longer period of time.

Communication between you and your lender is necessary whether you have had an illness or job loss. Missing a mortgage payment is not the end of the world but, letting your mortgage company know there is a problem demonstrates you care about you home and are trying to solve the problem.

When your bank gets your call they will probably ask if your financial problem is temporary or if a major change has occurred. Losing your job may jepordize future payments and trigger a notice of default. The earlier both of you can start finding solutions the more likely a foreclosure can be avoided.

The type of loan you have will make determine what choices are available or not. For instance, if you have a conforming conventional loan some lenders will be able to start finding satisfactory solutions for you and them. If your loan is FHA or VA or some other government backed or insured loan you may have to wait several months for the opportunity to start working on the loan problem. Irregardless, you still need to call your mortgage company.

Here is a list of 7 examples that a mortgage company may suggest.

1. Waive late payment fees

2. Extending your payment by spreading it out over a 12 to 24 month period and adding a fraction of the payment to each future payment till you get current on your payments.

3. Accept a partial payment

4. Move the past due payment to the end of the loan, giving you some time to recover

5. Interest or principal can be reduced

6. Creating a separate personal loan with favorable terms for the missed payment

7. Loan refinancing or re-amortizing the current loan

Your lender does not want your property. By law they can not own real estate. They do want the payment. Lenders are aware of economic downturns and will be more flexible with borrowers, as long as, good faith and trust are present.

Lenders are not mind readers so do not expect them to call and make suggestions. They may not know what your problems are and if you are having a difficult time making your payments.

The 7 examples above are available but your lender may have policies in place that limit what they can offer. These solutions are not automatic, you must qualify for a lender to grant any changes to your loan. Lenders may ask for proof of job loss and may want financial statements to justify any offer for help. This procedure may be inconvienant and invasive but, if you can keep your house it may be worth the trouble.

Do you want to gamble and risk the loss of your home or make a phone call?

Historicly high foreclosure rates were caused by lack of controls on the lending institutions. Easy qualification of buyers and outright mortgage fraud engaged in greedy brokers undermined our financial lenders. Billions of dollars lent to high risk borrowers. All these loans were bundled together and securitized. The financial securities were bought by institutional investors, IRA retirement plans and even foreign investors. Homeowners who were qualified under optimist and unrealist criteria soon found they could not make the payments on their mortgage. Default notices were sent after a delinquent loan payment or two remained unpaid. Collection efforts were made until a decision was made to foreclose the loan. Attorneys representing the lenders sent hundreds and thousands of these foreclosure notices a month. Homes were sold at auction and the homeowners were foreced to move if they had not already moved on. Some of these homes sold at auction but most were retained by the lenders. These REOs represented poor lending practices and the FDIC rules came into play. Large reserves of capital had to be set aside as holding and management costs, as well as, costs to liquidate the asset. Naturally, many large firms failed and investors holding these securities lost huge amounts of equity. Our economy was dealt a financial blow that sent shock waves throughout the worlds financial markets. A homeowner in financial distress and feeling pressured by the bank should open communication with them. You should personally contact the lender by phone, fax, email or direct mail as soon as possible. Your lender must know what the problem is and how they can help resolve the problem. Many options are available in the early days of default. Absolutely, do not hide or avoid speaking with the bank. First, consult a professional. You may want to discuss this matter with an attorney. Other sources of help are foreclosure experts and others who are qualified in this area. Get all the advice you can. Do not hire anyone yet as your lender will be upset with you if repayment of your loan is not first considered. Second, by all means seek out help from any organization with means to help with your finances or management of your finances. Debt restructuring and asset protection can be obtained with experts and individuals willing to help. Simply tell your story with details of what you can do or not do. Important information you must provide is when you can provide funds, how much money, what terms and conditions you need as well as, other considerations. Get as much flexibility as possible for future renegotiation after your current situation is stabilized. Ask for more time to consider your options. Third, after considering your situation and all the information presented amkea decision of what you can do. Make a written plan describing all the tasks to be enacted. Schedule meetings with each party to the plan present your plan and get an agreement on something. Keep detailed records of the meeting and followup with a letter to recite the decisions made. Keep your emotions reined in and be objective even though these problems are very personal to you. Do not be fearful it is counterproductive. Ask for more time. Your situation will improve with time. Keep in contact with your supportive friends and others offering help. Keep active and avoid analysis paralysis. Keep looking for additional options to help keep your home and family secure.

These three steps are the beginning and may be adequate, but if you are still unable to keep your bills paid you will want to look for other methods. Homeowners who have the loss of a primary or a second income will have to seek more severe choices which may include the sale of their primary residence and uprooting of the family.