It is my understanding that many people in foreclosure status would actually like to do anything they can to stop foreclosure sale.  Most of these people have had their homes for many years and allowed themselves to be duped into refinancing homes that were free and clear.

They also refinanced homes that were at an affordable original purchase amount, but because they may have needed extra money for one thing or another, mortgage reps talked people into getting equity out of their homes to pay for whatever extra expenses they may have had.

Because of this, now these people are unable to pay the higher mortgages on their homes mostly because they were talked into a 2 year arm mortgage. This meant that after two years, the interest on the loan will increase according to the market rates and the mortgage would increase drastically.

This all started the domino effect of the foreclosure boom.

Selling the Home

One way to stop foreclosure sale is to actually sell the home.  I was actually in this situation.

I purchased a home for someone who was losing it. I purchased it in April of 2005 with the intent that the previous owner would pay the current mortgage and repair her credit. After the year was up, she was supposed to buy the home back.

She paid the mortgage up until January of 2006 and then stopped making payments.  I then had to take her to court, evict her (done in March 2005) and then pay the mortgage myself because I could not find a tenant.

By June 2006, I was no longer able to make the mortgage payments for this house as well as my own. Meanwhile, the finance company had began the foreclosure proceedings.

I then put the home up for sale in October after getting my foreclosure notice. Luckily, because I’ve been in real estate for years prior to this, I had a list of clients willing to buy the property.

In November 2006 I had the property sold. Because of this, I was able to stop foreclosure sale and pay off the bank what was owed to them in full and walk away with $50,000 profit.

Believe it or not, there is a way for you to stop foreclosure with a single question to your banker.  What is that question you ask?

The question is, “Is there any way we can do a loan modification to adjust the mortgage payment to an amount I can afford?”

The banker will have to then take all of your financial information and figure out if there is any way for them to lower the interest, increase the length of the term and come up with an amount that will be affordable to your income.

Because you are not the only client in this situation, this process alone may take up to six months just for them to give you an initial decision.

Before the foreclosure boom, the banks were notorious for denying these requests because they figured they could make more money selling the property in case of foreclosure.

Nowadays, however, there are more yays than nays. This is because there are way too many homes in this situation and banks are not in the business of real estate selling.

If many more people knew they could stop foreclosure with a single question to their banker, then we would probably have less foreclosures than we are plagued with at this time.

Of course you have to factor in that now after getting a loan modification you will be stuck with a home that is in negative equity.

Homes are now worth like half and sometimes less than that then when they were purchased years ago.  Also, the bank will add all the missed back payments and legal fees on top of the original purchase price.

This makes the home now waaay more than what it is worth.  So you must figure if the home is even worth going through all of that before you decide to stop foreclosure with a single question to your banker.

Many people decide to just abandon the home and deal with the foreclosure on their credit for seven years than to have an overpriced home for forty years.