Falling behind on payments does not have to mean foreclosure

The storms of life and the ups and downs of the economy in Georgia and across the U.S. have made home foreclosures a common occurrence in the last few decades. Homeowners who have lost a job or find themselves in other financial straits may feel that losing their home is inevitable, but that is not always the case.

Some states require lenders to file a foreclosure in court. According to the Georgia State Attorney General's Office, the lender does not need to involve the court to foreclose on a home here. Here, the lender must alert the borrower of its intent to hold a foreclosure sale 30 days before the sale date. Following the sale, the new owner can begin eviction proceedings, if necessary.

Foreclosure is not a foregone conclusion, however, should a homeowner fall behind in mortgage payments. Real estate information company RealtyTrac outlines several options for stopping foreclosure, but the first rule is to remain calm.

Homeowners may have more resources than they realize, including savings, unemployment insurance and even retirement funds, although there may be a penalty for early withdrawal. Another suggestion is to consider selling something valuable to free up money for house payments. If the resources are just not there to use, additional options include:

  • Short sale: A reasonable offer from another buyer that is less than the repayment amount. The drawback to this arrangement is that the lender may still sue the original borrower for any shortfall. Another catch is that money not repaid to the lender may be considered taxable income by the government.
  • Bankruptcy: Filing for bankruptcy brings foreclosure to a screeching halt. Debt collectors, including mortgage companies, cannot make further collection attempts once homeowners file for bankruptcy. This gives them a reprieve and time to work out new payment agreements.
  • Deed in lieu: This is an arrangement in which the homeowner signs the deed over to the bank in return for the bank agreeing not to foreclose.

Perhaps the best advice for homeowners to avoid foreclosure is to contact the lender as soon as possible. It is in the best interest of lenders to work out a repayment agreement, and banks have a variety of financial packages available for struggling homeowners, including loan modifications, refinancing, re-amortization and more.

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