9 Ways to Stop Foreclosure in Texas
Did you just get the notice from your bank that you’re being foreclosed on and are now curious to know how to stop a foreclosure? If it hasn’t happened yet, get ready because people are going to start calling and texting you and/or your family endlessly trying to buy your home. I bet some are even knocking on your door! On top of receiving hundreds of letters every day from investors & attorneys saying they can help you. Want to know how to make it all stop? In this blog, I’ll go over 9 options to stop a foreclosure and hopefully end all the madness.
Are you wanting to know how to stop a foreclosure? No matter what your scenario is, there is a way out of this, and you’ve already made a step in the right direction just by reading this. I put this blog together to inform you of what options exist to help you potentially stop, or at least pause, the pending foreclosure. Make sure you read through every single option before making a decision on which one is best for you. Try them one at a time or try multiple options at once to enhance your chances of getting the foreclosure stopped.
Let me start off by saying that if the foreclosure date HAS NOT passed yet, then you likely DO still own your home. I talk to people every day that get confused and think that their bank has already taken ownership. But, if you have just received notice from your bank with a FUTURE foreclosure date, that means you most likely are still the owner and still have a chance to stop a foreclosure
Having your home go into foreclosure is one of the worst possible things that could happen to a homeowner. You might think, “This is it! The bank has won and it’s game over for me!”. Well, I’m here to tell you that it’s not over yet. There are actually several options out there that you need to consider before giving up and walking away. Just pick the one that works best for you and TAKE ACTION NOW!
Keep in mind that foreclosure is also one of the worst possible things to have on your credit! You may not be able to buy another home for up to 7 years! It’s even going to be almost impossible for you to rent a decent apartment with foreclosure on your credit report, so it’s very important to take action and fix this as soon as possible.
So, let’s get into it! How do you stop a foreclosure? Here are 9 options you can use to try and stop the foreclosure:
- Loan Modification:
- Call your bank and see if you can speak to the loss mitigation department and start the process of a loan modification.
- A loan modification is where the bank works with you to renegotiate the terms of your current mortgage. If you qualify, the bank will take your entire loan plus your arrears and modify the terms to bring your mortgage current again. But, depending on what your current mortgage terms are, this could actually be bad!
- Once the bank modifies your loan, your payment could go up due depending on your current loan balance or the amount you are behind.
- Another very important thing to keep in mind is that getting approved for a loan modification can take roughly 30 days or more before you receive that final approval stamp. Meaning, they will not stop the foreclosure until you have that FINAL approval. So, if you’re a week or two away from the pending foreclosure date, then you might not have enough time on your hands to make this work.
- It’s very risky to keep this as your only option to stop a foreclosure. Especially if this isn’t your first time getting a loan modification. If you already have a history of one or more modifications, the likely hood of you getting approved gets slimmer and slimmer.
- What is forbearance? Basically, it’s the bank granting you more time by pausing your monthly mortgage payments or by temporarily allowing you to pay your mortgage at a reduced rate for a specific period of time! Let me make that clear, specific period of time NOT for the entirety of your loan. If will stop a foreclosure temporarily.
- If you plead your case to your lender about needing more time to get your affairs in order before they pull the trigger on the foreclosure, they might grant you a temporary forbearance! Just make sure you have a good reason.
- Now if this isn’t your first time up for foreclosure, they will likely not grant this to you! It’s more common amongst the first-timers that can demonstrate a true hardship, but it’s very rare that you would get one granted if you have been in this situation before.
- Bankruptcy is truly a great thing when you need it. It was created for people going through hard times and giving them a second chance by allowing them protection from their creditors.
- Now… there are multiple chapters to file bankruptcy under, so be sure to speak to a bankruptcy attorney to find which chapter would be best for you. Regardless of the chapter you decide to go with, they will all stop a foreclosure.
- If you decide to take the bankruptcy route to restructure your debt, just be aware that it can be very costly. You will likely still be responsible for your current mortgage PLUS the new reconstructed payment that will include all the debt you are currently behind on plus attorney fees.
- So, if you have issues paying your mortgage right now, then bankruptcy could potentially make it worse by increasing those monthly payments. If you can’t afford those monthly payments while you’re in bankruptcy, then they will most likely dismiss your case and kick you out of bankruptcy altogether.
- Then if that happens, you will end up right back in the same situation that you’re currently in. Also, don’t forget that it’s more common than you think for jobs to run credit reports on new hires and if they see a bankruptcy on your report, that could potentially be a red flag for them. If you are considering bankruptcy, I highly suggest reaching out to a bankruptcy attorney. Just remember, they are not free so be sure to find out the costs upfront.
- TEMPORARY RESTRAINING ORDER
- Commonly referred to as a TRO.
- A TRO is an emergency court order that restrains another party from taking any action until a hearing can be held. You will need an attorney to file a TRO and this could cost you around $2,000 depending on the attorney you use.
- The attorney will put together everything necessary for your case and will need to present it in court. From there, the court will either approve or deny your request.
- Now, this is not a long-term fix! It will stop a foreclosure but it’s only a temporary fix to provide you with a little more time. Once the TRO is approved, it typically stands for roughly 14 days. If you will not be able to reinstate your loan shortly after filing this, then this might not be the best option for you.
- A PARTIAL HUD CLAIM
- A partial HUD claim also referred to as the Home Affordable Modification Program or HAMP, is designed to help borrowers catch up on the arrears on their mortgages.
- FYI this is ONLY for FHA Loans. If you have a conventional loan, VA loan, or any other type of loan, then this most likely doesn’t apply to you. It’s best to call your lender to find out for sure.
- But, the beautiful thing about a partial HUD claim is that they actually take everything you’re currently behind on (mortgage-wise) and will pay it off! You heard that right! They will catch you up which will then bring you back into good standing with your mortgage which means it will stop a foreclosure for good and you will be back to normal.
- Sounds great right?? Well, for some it is and for some, it isn’t. HUD does not do this just to be nice. It essentially turns into a loan that you have to repay later. So you will need to pay them back, but only when you sell the home or pay off your first mortgage.
- The amount they lent you will be attached as a 2nd lien to your property. That way whenever you try to sell your home later, they will request payment then.
- The bad part about this is this lien will never go away until you pay it off in full. This is important to know because you will NEVER be able to negotiate this lien. Meaning you will never get them to agree to take less than what they lent you. To the point where they will even go as far as allowing your home to get foreclosed on if you can’t afford to pay off the lien plus your mortgage lien.
- Another reason why this is important to know is that this lien could potentially cause you to be severely upside down on the equity of your home.
- For example, if you currently owe $150,000 on your home and HUD just filed a lien for $30,000 because that’s how much in back payments you were behind…well, that means you now owe a total of $180,000 on your home. If your home is worth $170,000, then you would officially be upside down on your home.
- So if you ever tried to sell your home in the future, you would not be able to sell it traditionally unless you are willing to pay a lot of money at closing to make up the difference between what you sell it for and the total amount that you owe.
- So please make sure this is truly the best option for you before doing this!
- I’ve seen so many situations where this one lien on their property was the only reason they could not sell their home without having to come 10’s of thousands of dollars out of pocket.
- And also be aware that HUD will only do a partial HUD claim once. They will not do it any more than that.
- PAY OFF THE ARREARS YOURSELF
- This might sound like a no-brainer to you, but some people don’t realize that they still have this option! At least until the foreclosure actually happens!
- All you need to do is call your bank and request a reinstatement quote. This could take several days for the bank to process so don’t wait too long.
- Don’t be shocked if it’s higher than you expected. You’ve had months of late payment fees and now attorney fees are being thrown into this as well.
- But unfortunately, your only option to pay off your arrears right now is if you currently have the money to make this happen or if you have friends and family that are able to help. If you do, great! Reinstating will stop a foreclosure.
- Since you haven’t been making your mortgage payments, your credit is not in good standing anymore. This means that you will not be able to qualify for any credit cards or personal loans to pay off your arrears to reinstate.
- DEED IN LIEU
- A deed in lieu is where you make an agreement between you and your lender to sign over the deed to your property allowing you to walk away.
- Literally, both handing over your house keys and signing the Title of your house over to your lender. Essentially, walking away.
- Now, this could still affect your credit drastically. Since it will show up on your credit report, it’s very rare (at least in my opinion) for this to truly be the best option for people, but at least it will stop a foreclosure.
- The other issue is that you don’t get to collect on any potential income from your property. Even if you could sell your home right now and make $5,000, that’s still a million times better than a deed in lieu because you were able to make a profit AND you were able to avoid the massive credit hit.
- If you sign over the deed to the lender, the lender isn’t going to pay you anything for your house. This process can take about 90 days for the bank to do their due diligence. So, if you’re facing foreclosure within a couple of weeks, this is likely not the best option for you.
- This is not what it sounds like! This is nowhere near a short process. It can actually take about 6 months to several years before it’s all said and done.
- A short sale is where you are able to sell the home for LESS than what you owe, but instead of you paying out of pocket at closing to make up the difference, your lender just agrees to take a lesser amount.
- For simple math, here is an example: Let’s say you owe $200,000 on your mortgage, but the value of your home is actually $170,000. That means you have $30,000 of negative equity. So, if you sold your home then you would essentially need to pay that $30,000 difference at closing PLUS any other closing costs owed.
- Your bank will determine whether to approve this after you apply for a short sale through the loss mitigation department. If they do approve it, then this will stop a foreclosure.
- The approval process requires a LOT of documents and it requires a real estate agent to be involved throughout the process. The bank basically wants to see that you are actually experiencing hardship and that this truly is your only option to be able to walk away.
- Just like a deed in lieu, this does damage your credit, unfortunately. Also, just like the deed in lieu process, it takes a while for your bank to sort through all of your submitted documents before determining an approval or denial.
- The approval process could take anywhere from 30 days to I’ve seen as long as 6 months. And that’s just for the approval side of this. You still have to go through the lengthy process of listing your home with a real estate agent and finding a buyer.
- Once you find a buyer, it could take a few months to even a few years before you finally close and can officially walk away.
- So, if you are short on time because of that pending foreclosure, this might not be the best option for you. Or if you actually do have enough equity to sell your home without going through this, then please don’t apply! You will waste so much of your time because they almost certainly will not approve you.
- SELL YOUR HOME AND CASH OUT ON YOUR EQUITY
- Now when it comes to selling your home, you have two options that will both stop a foreclosure.
- You can call a real estate agent and see if they can list your home OR you can sell quickly to an investor. And of course, there are pros and cons to both!
- Realtors are great at what they do, but they are not your buyers. They just assist in the process to help you find a buyer. And about 90% of their buyers require loans rather than paying in cash.
- If their buyers bring a loan, that means it will usually take a minimum of 30 days before they can close. That also means the home cannot be in disrepair! Lenders will not lend on homes that need work.
- So, if you are less than 30 days from the foreclosure auction or if your home needs too much work, then going with a realtor is probably not the best option for you.
- And don’t forget about all the showings you will have to deal with on top of the buyers coming through and nitpicking everything that’s wrong with your house to either lower your asking price or request for you fix a laundry list of items.
- If listing with a Realtor doesn’t fit your needs, then call an investor like me!!
- The difference between an investor and a real estate agent is that WE ARE your buyer! I don’t need to go out and waste time trying to find a buyer because we are the buyer.
- Buying homes before they go into foreclosure is my specialty and this will stop a foreclosure. I can close in as little as 5 business days, pay cash, won’t bring a bunch of people to show your home, we won’t require you to fix anything, and I will even give you some time to stay in your home after we close if you need it.
If you think selling to me might be a good option for you and this might be the best way to stop a foreclosure, please reach out! You can always GIVE US A CALL AT 214-761-3150 or you can ENTER IN YOUR INFORMATION BELOW AND WE’LL CALL YOU!
North Texas Cash For Homes is a local North Texas home-buying company specializing in buying houses that are in too much disrepair, need to be sold quickly, or have some sort of legal issue involving the property such as probate, divorce, foreclosure, etc. We also provide educational videos surrounding these topics on YouTube including how to stop a foreclosure.
Just let us make you an offer! What could it hurt?
Also, please remember that anything I mentioned here is just for educational purposes only. It is not considered legal or financial advice.
I know you just read a lot and are probably still taking it all in, which is understandable. We also have another article that might be helpful for you. If you’re still considering how you will stop a foreclosure, read this article on what the effects of a foreclosure are and what all sellers should know.