by: David Arnold Livingston
Foreclosure is one of the risks involved in engaging in
business or owning a property if financing comes from a
lender which can be a bank, an institution, family and
friends and any agencies that can provide the needed
amount. Owning a home is one of the needs that man
desires to fulfill but with the present situation of
the world, money will always be involved. The same is
true for entrepreneurs who want to venture into the
business they want. Along the process they can either
be a success or a failure, a winner or a loser.
Foreclosure happens when the debtor fails to pay his
mortgage. A mortgage is defined as a temporary,
conditional pledge of property to the creditor to
ensure performance of the obligation to pay for the
debt. The mortgage or the security interest in the
property gives the creditor the right of foreclosure or
the legal right to keep the collateral together with
other proceeds to recover the amount invested or
loaned. If ever the property is less than the amount
owed, a deficiency judgment can happen. Deficiency
judgments result from a lawsuit filed by the creditor
against the debtor. Foreclosure and deficiency
judgment can stain the debtor's credibility which can
make it difficult for him to secure a loan in later
years.
Financial setbacks which make the debtor unable to pay
the amount involved can lead to foreclosure. It may
lead to fear, depressions and anxiety but it is one of
the bitter and painful truths that the debtor must face
as consequence to the risk or action taken. However
they might not allow such situations like foreclosure
to keep them down. It can be their first reaction but
they must still go with the fight. There are many ways
to solve the problem and so are the ways and means to
handle foreclosure problems. The first thing that the
debtor can do to get away with a foreclosure is to
borrow money from people around him. It could be his
friends, relatives and family. One or more persons can
be involved in the loan contract. In case the debtor is
involved in such kind of contract, his co-signer could
be the first person to help him get through the
foreclosure mess. Two heads are better than one so in
that case they can make plans to survive foreclosure
problems.
Another possible solution to prevent foreclosure is to
make a deal with the creditor or the lender. Once the
debtor is tangled in financial problems, he must
immediately call or make a letter to inform the agency
or the lender. You may have second thoughts of
informing your lender of your situation but they can be
of help to prevent foreclosure of your properties
especially if it is the home which has became a part of
your life. Financers reap the fruits of the money they
lend by collecting the principal and the interest
payments and not by foreclosure. They may have
necessary adjustments to help you get through the
foreclosure. The "Loss Mitigation Department" of the
agency you borrowed money from handles such situations.
They can adjust the time frame to give you a chance to
gain control over the situation and avoid the
foreclosure.
There are several means that the lender can do to help
you prevent foreclosure. They can have a postal claim,
mortgage modification or special forbearance. A partial
claim happens when the debtor is not qualified to have
mortgage modification or special forbearance. However
the property must be occupied by the owner and the debt
or income ratio requirements must be followed. Mortgage
modification can allow the debtor to extend the time
frame of the mortgage loan. The monthly payment can
also be reduced. Special forbearance happens when a
repayment plan is done considering your financial
condition. So, as you can see, there are many options
to avoiding foreclosure.