Usually, before lenders actually proceed with foreclosing on a homeowner’s property, they give the homeowner an opportunity to repay the outstanding delinquency. Contrary to popular belief, most lenders view foreclosure as the least favorable option or last resort.
Repay Your Delinquent Loan as Soon as Possible
If you’re behind on your mortgage payments, the best thing you can do for yourself and your family is to contact your lender and prioritize your finances. If you need to borrow money, now is a good time to contact family and friends. Eliminate any unnecessary expenses and work hard to pay off your mortgage debts. By doing this now, you may avoid owing your entire loan amount through the acceleration process. You can find other free information from the U.S. Department of Housing and Urban Development’s website (HUD).
Deed of Trust and Nonjudicial Foreclosure: The Loan Acceleration Provision in Your Deed of Trust
If you purchased your home in Virginia, you probably signed a deed of trust and promissory note or promise to pay. The deed of trust allowed your lender to appoint a trustee. This trustee typically has the legal ability to accelerate your loan payments if you are really behind on your mortgage payments. At some point, your lender can require you to repay the entire outstanding loan amount and not just your missed payments.
For example, if you borrowed $400,000 from Bank to buy your home and owe $4,000 to your bank for missed mortgage payments, your trustee can proceed with nonjudicial foreclosure by accelerating the entire mortgage, and you’ll owe $400,000, plus interest, at once.
Thus, making sure you repay your outstanding loan amount before your lender proceeds with foreclosure becomes imperative.
Lenders and Foreclosure
Lenders typically lose money when they proceed with foreclosure sales. This is because foreclosed homes sell at distressed values or much less than homes that are not in foreclosure.
Deed in Lieu of Foreclosures, Short Sales, Loan Modifications and Other Options to Foreclosure
If you absolutely cannot repay your lender, you need to consider your options. If you want to remain in your home, you’ll need to figure out a way to repay your lender or ask your lender to agree to a loan modification. Modifying your loan is not always an option, and at some point, the process becomes so frustrating or complex that contacting a Virginia real estate attorney is the best course of action. If you don’t qualify for a loan modification, your options are to remain in your home and wait for your lender to sell your home through foreclosure, pursue a deed in lieu of foreclosure or consider short selling your home. In my experience, lenders rarely agree to a deed in lieu, and a short sale becomes the only viable alternative.
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