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Legally Speaking

This economy and interest rates have created tough times for many. Few things are more difficult to deal with than the possibility of losing your home through foreclosure. Rising interest rates and other factors have created a situation where coming up with the funds necessary to pay the monthly mortgage has become more difficult. If you find yourself in that situation, there are some things you can do to prevent the floor from falling in below you.

Don’t play Ostrich. Hiding your head in the sand will prevent you from taking the actions available to you to delay or prevent a foreclosure. The first line of defense is communication. Stay in touch with your banker. Go in and meet with them to look for ways to work yourself out of the current situation.

Banks are often willing to convert payments to interest only payments, or to delay some payments to allow you an opportunity to get back on your feet. You need to talk to them about this so keep your wits about you and make the necessary calls. This is where local banking relationships are really important.

Look actively for replacement financing. Rates are down, but loan commitments can be elusive when your credit score has taken some shots. The best way out of a collapsing financing arrangement is to find another one, and hopefully with a locked-in rate.

If a foreclosure is filed, participate in the process to keep track of what is going on. This is not an instant take-away. Most home foreclosures take seven to thirteen months to complete. That gives you more time to try to refinance.

Even after a judgment of foreclosure has been entered by the Court, you still have six to twelve months to “redeem” your home by paying the amount owed to the bank. That can be either by refinancing the loan or by selling the house. You do have the right to sell the house after a foreclosure is filed, so that may be an option to get some of your money back out of your investment.

While money is tight in these situations, hiring a lawyer to represent you can keep you from losing your home, and provide additional options you may not otherwise be aware of. For the cost of one or two house payments you can normally get some valuable advice that is well worth it, even when money is tight.