Frequently Asked Foreclosure Questions
QUESTION: I’ve just been served with a foreclosure lawsuit. Should I start packing?
ANSWER: Put the boxes away and start reading through our website and you’ll quickly see that you probably have a lot more time and far more alternatives than you’ve imagined. The mortgage foreclosure process takes several months and in some states years, and once you’ve developed your foreclosure strategy you can take control of your situation and end the foreclosure lawsuit altogether.
More on Your Foreclosure Options
QUESTION: What is Strategic Default and how can it help me stop foreclosure?
ANSWER: Strategic Default is a foreclosure alternative where you stop making mortgage payments that you can otherwise afford as part of an overall plan to avoid foreclosure and improve your finances through reduced or eliminated payments.
Strategic Default Can Help Avoid Foreclosure
QUESTION: I’m not sure what kind of information the bank needs and we don’t have much practice writing letters. Do you have anything to help?
ANSWER: Like most people if you don’t send many letters and don’t write regularly as part of your day, preparing an important letter can be harder than you remember. To guide you and make sure you send the right letter for each situation, we’ve prepared sample cover and hardship letters for everything from requesting loan modifications to asking permission for a short sale or deed in lieu of foreclosure. Modify the letters to reflect your situation and the hard project you’ve been putting off for months will be done in 15 minutes or less.
Review Our Sample Documents and Letters
QUESTION: What is a Deed in Lieu of Foreclosure and how does it work?
ANSWER: A Deed in Lieu of Foreclosure is basically a contract between you and the bank in which you agree to return your property to the bank without the cost and aggravation of going to court and is the cheapest and easiest way to immediately end your foreclosure lawsuit.
More on Deed in Lieu of Foreclosure
QUESTION: What’s the difference between a Promissory Note and a Mortgage?
ANSWER: The promissory note is the actual loan agreement itself and contains the essential terms of the transaction including the total amount you owe, the interest rate and how its calculated as well as the amount and number of monthly payments. The mortgage, also referred to as a deed of trust in some states, is simply a security agreement which protects the lender as you literally pledge your property to the lender as security for the actual loan which is contained in the promissory note.
More on the Distinction between a Promissory Note and a Mortgage
QUESTION: My lender forced me to buy Mortgage Insurance when I bought my home. I know the mortgage insurance helps protect the bank but does it help me in any way?
ANSWER: Mortgage insurance was originally designed to protect banks if you default on your loan by reimbursing lenders for their foreclosure related losses and expenses. However, what’s happened is that mortgage insurers have literally become “borrower’s advocates” in many situations because they’d rather help you avoid foreclosure than paying banks an average of $50-60,000 per claim.
More on How Mortgage Insurance Can Help Stop Foreclosures
QUESTION: What’s the Difference between Chapter 13 and Chapter 7 Bankruptcy?
ANSWER: In general, a Chapter 7 bankruptcy proceeding is a liquidation of both your assets and debts (including your home) with the final result discharging most if not all of your financial obligations.
Unlike Chapter 7, Chapter 13 bankruptcy cases do allow you to save your home under the right circumstances but don’t eliminate your debts entirely. Instead, your bills are consolidated into a single monthly payment that lasts anywhere from 3-5 years with most of your debts reduced to pennies on the dollar. At the end of the court structured repayment plan, those debts are then discharged in full.
More on How Bankruptcy Stops Foreclosures
More Frequently Asked Foreclosure Questions
QUESTION: If I’m served with a foreclosure lawsuit, are there any possible defenses to the lawsuit or should I just give up and stop fighting?
ANSWER: Don’t stop fighting until you’ve exhausted every possible option – its your home and worth fighting for! The good news is that there are several potential defenses that may help you delay or even win the foreclosure lawsuit depending on your specific circumstances so read our section on foreclosure defenses and get ready to protect what’s yours.
Detailed Information on Foreclosure Defenses to Help Defend Your Foreclosure Lawsuit
QUESTION: Does it make any sense to rent my home for a year or 2 and move to a cheaper rental home to save money or am I just prolonging the inevitable foreclosure?
ANSWER: Foreclosure renting is an excellent way to save your home from foreclosure and buy time until your personal situation improves. By using the rental income to make your existing mortgage payments you’ll avoid default and live in a more affordable home until you’re able to resume monthly payments or qualify for a loan modification to make the mortgage more affordable.
More on Renting Your Home to Avoid Foreclosure
QUESTION: What is a Foreclosure Short Sale and how does it work?
ANSWER: A Foreclosure Short Sale is when a lender lets you sell your home for less than your loan amount and also agrees to waive the remaining balance so they won’t try to collect what you still owe. Short sales are favored by many homeowners as one of the best foreclosure alternatives and considered by most people at some point as part of their stop foreclosure program and possible foreclosure solution.
QUESTION: I hate everything to do with foreclosures and just want it to end as soon as possible. Does it make sense to just Walk Away from the mortgage?
ANSWER: No, there are much more effective ways to end your mortgage and control when and how you move out. Although the foreclosure process is no fun, look at your options before deciding to give up. If you decide it’s the best alternative for you, negotiate a Deed in Lieu of Foreclosure with the bank rather than simply Walking Away which will end your foreclosure process once and for all.
See Why Walking Away is Your Worst Foreclosure Option
QUESTION: What is a Financial Hardship Letter and why do I need one?
ANSWER: Financial Hardship Letters are required by most banks when you’re asking for a loan modification or permission for a short sale or deed in lieu of foreclosure. This letter may be your best chance to explain how your difficulties arose and convince the bank you need help. Different sample letters are available depending on which foreclosure alternative you select so read each of our sections relevant to your topic to make sure you include the right information.