I Am Facing Foreclosure. What Should I Do?
When a person is facing foreclosure, most of the time, they have already tried to modify their loan and have been turned down. But if you have not done that, you should try. I can virtually assure you that it will be a long, cumbersome and frustrating process, and in my experience, most people get turned down, but those who do get the loan modification can get some really good terms, including paying 2% interest on only a portion of their mortgage with the rest of it being interest-free, re-amortizing the mortgage over 40 years and wrapping any arrears into the modified loan.
While a loan modification can be a sweetheart deal, my anecdotal experience is that only about 10% of my clients actually get decent, workable loan modifications. It can be a long, frustrating, arduous, repetitive process, but sometimes there’s a reward at the end.
Most people facing foreclosure have other underlying debt issues, such as second mortgages, credit card debt, taxes, etc. When you call me, we will go through all your options, including filing Chapter 7 (which would usually mean you will get a loan modification or will let your house go), curing the arrears in Chapter 13 and possibly doing a lien strip. If losing your home is inevitable, the timing of your bankruptcy can be strategic in maximizing your rights to remain in the house as long as possible while you are seeking alternate housing.