Many people who face an impending foreclosure are unaware there are steps they can take to stop the process. If a foreclosure sale is looming on the horizon, borrowers can save their home and stop the sale immediately if they take the necessary steps. Here are 3 methods to stop foreclosure at the last minute.
Apply for a Loan Modification
Although it is not a good idea to apply for a loan modification at the last minute, borrowers can apply for loan modifications which will delay the foreclosure process. Banks are not allowed to proceed with foreclosures while there is a loss mitigation application pending. If a loan modification is approved, banks must immediately stop with default proceedings so long as borrowers make timely payments under the terms of the modification. However, the downside of loan modifications is the banks decide whether or not to approve the modifications.
File for Bankruptcy
Borrowers who are behind on their mortgage payments can file for bankruptcy, which will immediately stop the foreclosure sale. When borrowers file for bankruptcy, a process called an automatic stay goes into effect and stops banks from foreclosing. During the bankruptcy process, banks must halt any attempts to collect debts until the courts resolve the bankruptcy.
File a Lawsuit
Borrowers can file a lawsuit if the lender tries to foreclose without going through the judicial system. Borrowers facing foreclosure must prove to the courts that banks cannot verify their own promissory notes and did not comply with a state’s mediation requirements. Borrowers can file lawsuits if the banks did not follow any state’s required foreclosure process or if they violated a borrower’s rights under the Homeowner Bill of Rights. However, filing a lawsuit against a bank only delays the foreclosure process, and if borrowers lose the lawsuit, they must pay the bank’s attorney fees and any additional court costs.