How to Stop Foreclosure

Related Information
 -   Stop Foreclosure
 -   MN Attorney General Guide to Foreclosure
 -   HUD National Servicing Center has more information on avoiding foreclosure
 -   Read the PDF version of the How To Avoid Foreclosure brochure
 -   Download Short Sale Documents

Make no mistake.... to Stop Foreclosure you must act quickly and decisively. Your home will be sold unless you take the correct steps to satisfy the Mortgage Company and get your loan caught up.
"We can Help Stop a Foreclosure... let us help. " Marc Hoffmann, LMS Case Manager

Foreclosure is not something you planned on. The day you purchased your home was a happy time, and no one mentioned the word foreclosure. However, as sad as the situation is, it is something that happens when you get behind on your Home Mortgage-Loan. When you get behind in payments, your lender isn't typically looking out for your best interest and won't automatically put you into a program to bring your loan up-to-date. You must put the plan into motion and provide the lender with the documentation they require to analyze your financial situation to stop the Foreclosure action. Although lenders do not want to foreclose if it can be avoided, they do want to make sure you can follow-through on any promises you make to bring your account current. Keep in mind, statistics say that 80% of any workout or forbearance plans end up in default again. Lender's know this and that is why they are willing to work something out (as it's a way to get more money from the homeowner).

Mediation is the key to Stopping the Foreclosure. As we stated before, the Mortgage Company does not want to Foreclose and is usually willing to agree to terms to Stop Foreclosure. These terms are negotiable and it is to your advantage to develop a plan of action before contacting them. This plan needs to be thoroughly analyzed before presenting it to them as it becomes very difficult to adjust it. We have extensive experience in this area and we can develop a winning strategy or plan for you to Stop the Foreclosure that is proven successful.

Proven Plan for Stopping Foreclosure

1. You need to come up with some amount of money to apply to the deficiency. We typically refer to this as the “Contribution Figure” or a "Good Faith Payment". This will usually be somewhere between 35% - 50% of the total amount that is required to bring the loan completely current. With the clients we help, we typically see this number between 25%-30%. The Mortgage Companies always require this money as a down payment for a number of reasons:

  • To bring the loan current quicker
  • To prove to the lender that your are sincere in wanting to get the loan caught up. They also need to use this as a penalty to getting behind. If they didn’t they would have a lot more people missing payments without legitimate reasons.

2. You need to document your current financial situation to show that you can afford the monthly payments. Most of the time, the new payment will be 30-50% higher than your existing payment. If you are considering selling your home, this is the time to sell. If you want to push for a workout with the bank, you need to prove that you can afford the new monthly payments. This is very tricky… you need to be accurate and honest as they may not accept changes once it is submitted.

3. The last step is to develop a letter that explains why you fell behind. This letter is referred to as the “Hardship Letter.” We have many examples of letters that the Mortgage Company is looking for. This letter must be honest and appeal to them to show that you want to stop the foreclosure and that you deserve another chance. All of these items can then be submitted to your lender in one package called a “Work-out Package”. This package is then presented to the Mortgage Company in a format they can easily understand which allows them to make a decision quickly and responsibly.

Most Mortgage Companies will consider a Short Sale as an option if you've decided the home is too much for you. If accepted by the lender, a foreclosure will stay off of your credit.

Other options may include:

We call ourselves Specialists because we SPECIALIZE in helping people selling their home to avoid foreclosure.
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