Can You Stop Foreclosure?

If you're a homeowner in financial trouble, and your mortgage is one of the many that will slip into foreclosure this year, you may be looking at strategies to stop the foreclosure process. There are just a few ways to stop foreclosure, but the process is stoppable, sometimes even after a house has been sold.

The most effective way to stop foreclosure is to bring your mortgage payments current. The bank cannot foreclose on a mortgage in good standing, so bringing your payments current is a sure-fire strategy to stop foreclosure. Unfortunately, if you're experiencing unresolved financial troubles, this may not be possible. The loss of a job, a reduction in income or an increase in the amount of the mortgage payment may put your house out of financial reach for you. Before letting your house slip into foreclosure, talk to the mortgage holder to see if they can offer some type of modification that will make paying your mortgage easier.

Another way to stop foreclosures is to sell the property. The sale of the property will satisfy your obligation to the bank, provided that the sale price is sufficient to cover the amount owed. In today's tight real estate market, getting your asking price for a property can be tough, and in some cases downright impossible. If you're "upside down" on your mortgage – that is, you owe more than the property is worth – a short sale may provide you with an opportunity to sell the property at a reduced price and receive some loan forgiveness from the mortgage holder. There are many intricacies to negotiating a short sale, so you'll want to consult an expert if this is the route you plan to take.

Bankruptcy will also temporarily halt a foreclosure proceeding, but declaring bankruptcy to avoid foreclosure is a clear-cut case of jumping out of the frying pan and into the fire. When everything is said and done, the bankruptcy court can still order the sale of your home under certain circumstances, so keeping your home in bankruptcy isn't a given.

After the lender has foreclosed on a home, most states permit the homeowner to "redeem" or reclaim the property for a certain period of time. Only a few states have "strict foreclosure" rules that don't permit redemption. The redemption period varies by state, but if your lender has foreclosed on your property, and you can come up with all of the money you owe, you can reclaim ownership on the property. Redemptions can and do happen, but most homeowners don't redeem foreclosed properties.