Prevent Foreclosure: Tips for Working with Mortgage Lenders

Many desperate homeowners need help to prevent foreclosure. The current housing situation has caused fear and tremendous stress for borrowers. With ever-declining property values, thousands of borrowers owe more than their home is worth. Several are choosing to walk away from their home; especially if they are struggling to make ends meet.

There are many reasons to prevent foreclosure. The most obvious is no one wants to lose their home and end up living in a homeless shelter or on the streets. Those fortunate enough to locate housing will probably end up paying more.

Foreclosure wreaks havoc on your credit. Utility companies can charge security deposits amounting to two or three months of utility costs. Landlords might require a higher security deposit or charge you a deposit, plus first and last months' rent. Insurance companies can increase your premiums.

If you are able to obtain credit after foreclosure, you will pay much higher interest rates. Foreclosure places you into a high-risk category and creditors are notorious for penalizing those who don't pay their bills on time. Credit limits will be significantly reduced and in most cases, borrowers will be forced to obtain prepaid credit cards in order to begin rebuilding their credit.

The black mark of foreclosure can even affect your ability to gain employment. Today, most employers require background and credit checks as part of their hiring process. Losing your home to foreclosure can appear as if you are irresponsible. Most employers don't have the time or desire to obtain the facts which caused applicants to default on their loan. Instead, they will select from applicants with good credit and a clean background.

One option to prevent foreclosure is by obtaining a loan modification. This is a good choice for borrowers who experienced a temporary financial setback, but can now make their mortgage payment. Some lenders will place mortgage arrearages to the end of the loan to help the borrower become current.

Other lenders require borrowers to cure mortgage arrearages before entering into a loan modification. Some will accept a partial down payment and reinstate the mortgage note. Depending on the circumstances, some lenders will temporarily reduce or suspend payments. Much depends on the borrower's previous payment history; balance due on the loan; and ability to remain current.

Another option to prevent foreclosure is to request short sale approval from your lender. If you are delinquent on your account by 31 days or more; do not own any financial assets; and owe more than your home is worth you can apply for a short sale.

Obtaining approval takes time, patience and persistence. With the massive influx of foreclosure homes, banks are overwhelmed with short sale requests. In essence, a short sale involves convincing your lender to accept less than is owed on your home loan.

In exchange for the reduced sale price, borrowers must find a buyer willing to purchase their property. Some lenders require borrowers to have a buyer in place before they will even discuss the option of short selling. Others will allow borrowers to list their property through an agent, but the home must be sold within a short period of time; usually two to three months.

One insider-secret for selling real estate quickly is to locate a real estate investor. When possible, seek out investors who have experience with short sale transactions. Investors can be found by conducting research online, asking for referrals from friends and family, or by attending real estate networking events.

Few people understand the process of how to short sale. Most borrowers require assistance from a bank loss mitigator, real estate lawyer, realtor or investor. Working with experienced professionals can improve your chances of a successful short sale transaction.


Simon Volkov is a well-respected real estate professional who specializes in helping borrowers prevent foreclosure. Simon is the author of the popular "Short Sale Hardship Letter ebook Course" and has engaged in hundreds of successful short sale transactions. If you need assistance in obtaining short sale approval, visit www.SimonVolkov.com today.