As many people in New Jersey learned during the recession, if the market crashes or someone loses their job even financially responsible homeowners may find themselves facing foreclosure. While the American economy has come a long way since then, there are still many homeowners facing foreclosure due to falling behind on payments. What can people do when this happens?
According to Forbes, the first step is education on the foreclosure process. The more information a person has about foreclosure, how it works and what the process entails, the better position they may be in to rectify the situation. Believe it or not, the best starting point is the foreclosure letters that were mailed.
Another important tip to consider is calling the lender. Many homeowners make the mistake of avoiding the lender when they realize they are unable to make timely payments. However, it may be best to let the lender know as soon as possible and then make arrangements. Available options lenders may suggest include the following:
- Repayment plan
- Loan modification
If all else fails, a short sale may prevent foreclosure and prevent bankruptcy, thereby protecting a buyer’s credit history. However, if other bills have caught up to them, it may not be enough. In these instances, filing for bankruptcy may be necessary.
Finally, FindLaw points out that even when homeowners lose the house to foreclosure, they may be able to regain it. The process for regaining the property is known as statutory redemption. This allows homeowners to pay the foreclosure sale price and interest, and then remain in the home. Redemption periods are sometimes only 30 days but some homeowners have received up to two years.