By Many Filipino’s in the valley today are asking this question more frequently these days.  The housing market continues to fall without any bottom in site.  With mortgage payments going up and values going down the thought of foreclosures are looming over everyone’s minds.  With bills piling up and the costs of gas and groceries out of control many homeowner’s who have made their mortgage payments on time every month will begin to fall behind.

There are many different steps that homeowners need to take when they are amidst a foreclosure.  First of all you need to take a deep breath and understand that a lot of the things that have happened cannot be changed.  We need to move forward and try solving the problem.  There are typically 4 options that homeowners have when facing foreclosure. 

1. Mortgage Modification:  You can get in contact with your current lender and see if your payments can be modified to a lower monthly payment.  You may be able to negotiate with your lender to turn your ARM into a fixed rate.  If you are behind on your payments you may also be able to negotiate with the bank to add the months behind to the mortgage which is called a loan forbearance.
2. Deed in Lieu:  This is the simplest way to avoid foreclosure.  In this option you are simply giving the house back to the bank without going thru the foreclosure process.  It saves time and money for the bank.  You would simply deed the property back to the bank.  Check with your lender to see if you qualify.
3. Short Sale:  In this process the lender allows you to sell the house for less than what is owed on the property.  In some cases you may be subject to pay extra income taxes.  Please seek advice from an accountant or real estate attorney regarding possible ramifications of a short sale.
4. Foreclosure:  In this scenario the home has gone to sale at the court house where in most cases the lender takes back the property.  If the first 3 options do not work, a foreclosure is the final option.  You will be given written notice by certified mail usually 60 days before the sale date to give you sufficient time to move out.

Although these are different options that you may have to avoid foreclosure, your credit score is still affected adversely.  A foreclosure or a Deed in Lieu will take you between 3 to 5 years before re-establishing your credit.  A short sale will enable you to re-establish your credit between 1 to 3 years.

There are many options that you have before your foreclose.  Understand your options so you are able to make an educated decision.  To get more detailed information locally you can visit, http://www.foreclosurecounceling.com/.

You may also email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it if you have more specific questions.