A commonly used term with reference to home loans is ‘foreclosure’, which is an action done by the lender. The action in response to a foreclosure is the ‘foreclosure defense’, which is done by the borrower. People dealing with home mortgage, are very well aware of these terminologies.
A foreclosure is a legal step taken by the lender in case the borrower defaults. When the borrower fails to make timely monthly payments of the home loan, then the lender is legally permitted to forcibly sell the asset (home) used as collateral in the transaction in order to recover the remainder of the loan amount.
At a Glance!
It is a step ahead of loan modification. Firstly, in case a borrower is facing economic and financial hardships, he/she can contact the lender either personally or through a legal advisor regarding loan modification, which is least effective. If loan modification is granted, both the parties then agree to abide by the new terms on temporary basis.
However, if the lender is not satisfied with the reasoning presented from the side of the borrower, he/she can go for a foreclosure. Although it costs the lender more than a restructuring, but if nothing else seems desirable then it is the last resort. However, no step can be taken legally prior to sending a foreclosure notice to the borrower.
At this point in time, the borrower can also attempt to prevent the lender from selling the home. This is called a foreclosure defense. This can only be done through a lawyer who specifically specializes in this legal service. Before anything else, the borrower has to provide a documented proof that he/she can meet a certain level of monthly loan payments and therefore the lender must not foreclose the home.
How to Deal With It?
The most effective tool to defend oneself against a foreclosure is the securitization audit. This is used for achieving certain objectives such as, reduction in the principal amount, restructuring of mortgage terms, and reduced interest rate on the existing mortgages.
Moreover, it can be used to prove that the notice of the borrower’s default sent by the lender was invalid, and thus the lender may become liable to pay for damages as a punishment by the law, or be sued by the borrower. However, all this is possible if the borrower holds a strong position as per the securitization document of the home, for which there comes in the securitization audit by a reputable auditor.
In addition, the borrower may use another tool called ‘Quiet Title’ or ‘Equity Stabilization’ which is meant to remove the lender’s invalid claims against the borrower’s property. This is also done through proper jurisdiction. It will not only modify the mortgage terms, but will also enable the borrower to legally stay in his/her home.
For this purpose, the borrower can hire an attorney for only a specific time period so that he/she is not required to pay for attorney’s services over an extended period of time. This is certainly a cost effective and a worthy option to opt for.
A Popular Myth
There is a popular myth regarding foreclosure that if the borrower has received a foreclosure notice from the lender, then it is already too late to do anything. It is to be noted here that foreclosure is not at all a profitable option for a lender; neither is it the only way out Poker88.
A foreclosure notice from the lender does not exactly mean a foreclosure; rather it serves to impress the borrower, and makes him realize the importance of timely payments. A lender always prefers not to foreclose the home because it makes him lose much more than what a simple loan modification costs.
Through the professional services of a reputable securitization auditor a foreclosure can surely be stopped by the borrower!
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