Stopping Foreclosure Process

Stopping Foreclosure Process And Qualifying For Mortgage

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Stopping Foreclosure Process And Qualifying For Mortgage Was UPDATED On January 19th, 2019

This BLOG is about Stopping Foreclosure Process And Qualify For Mortgage. Most homeowners never ever thought of foreclosing on their homes when they first purchased their homes.

  • Unfortunately, extenuating circumstances do happen in people’s lives that the possibility of foreclosure happen
  • Many homeowners lost their jobs, businesses, or had other financial crises happen during and after the real estate crisis of 2008
  • Loss of income will affect their ability to pay their monthly debt especially the mortgage payments
  • They can no longer afford to pay for their monthly mortgage payments
  • Lenders can start foreclosure proceedings if homeowners are late more than 120 days on their housing payments
  • There are thousands of hard-working Americans who lost a good-paying job
  • Older folks are often replaced by newer college graduates
  • Many who are working full time for a fraction of what they used to make and are underemployed due to the Great Recession of 2008
  • Many college-educated engineers are working as technicians
  • Managers are working as clerks
  • Police officers are working as security guards
  • The list goes on and on

In this article, we will cover and discuss qualifying for a mortgage after foreclosure and/or other housing events.

Situations Where Homeowners Go Into Foreclosure

How Qualifying For Mortgage

There are hundreds of examples where homeowners face pending foreclosure.

  • Some of the common situations are when a homeowner loses his or her business or job or a demotion from their current job
  • Many employers have made full-timers into part-timers too due to the Great Recession
  • An unexpected prolonged illness is another common reason
  • Illness or medical issues where homeowners are hospitalized and cannot work due to their medical situation or illness stops the flow of regular income
  • Other cases are when the working spouse dies
  • The household cannot afford to make the monthly housing payment due to the drop in income or no income
  • Divorce is another common reason where homeowners not just face foreclosure but also are forced into bankruptcy
  • Excessive credit obligations and unexpected major housing repairs can set any homeowner back

Can make them fall behind on their mortgage payment as well.

Alternatives To Avoid Foreclosure

Lenders do not want to be property owners and the last thing they want is the home.

  • They will work with homeowners to avoid foreclosure
  • Many mortgage lenders have a work out department where they have departments specifically assigned to work with homeowners in distress
  • The first thing distressed homeowners should do if they anticipate future problems in paying mortgage payments is contact lender before falling behind
  • Homeowners who are current on mortgage payments but anticipate hardship in the near future should contact their lender
  • Most lenders are more likely to work with them while they are current with mortgage payment before borrower goes in arrears
  • Borrowers who have a temporary situation where they just got laid off and can find employment in a month or two, the lender might offer a short term forbearance agreement
  • Short term payment agreements can be offered to borrowers with a three to six-month reprieve
  • Lenders can work out a repayment plan or add the arrears to the back of mortgage balance

In the event, if the homeowner has plenty of equity in their home, the lender might offer to add the missed payments to the balance of mortgage loan.

Loan Modification And Mortgage Loan Workout

A loan modification is where a lender will restructure the current loan so the borrower is able to pay their monthly housing payments with no struggle. Many lenders will want to know the finances of the homeowner before entertaining a loan modification. Lenders can structure it by forgiving some of the balance owed or lowering the mortgage rate to reduce monthly mortgage payment so it can be an affordable payment. Loan Modifications are only available to homeowners who have documented full-time verifiable income.

  • This normally happens when borrowers are upside down on their home where mortgage balance is higher than the value of the home
  • The lender can also do a partial claim
  • They can make a separate note to borrowers like a second mortgage to make the missed back mortgage payment

Borrowers will have options if they contact mortgage lender early enough prior to being late.

Advice On Stopping Foreclosure ProcessWhat are the appropriate Advice On Stopping Foreclosure Process

Homeowners who do not contact their mortgage lender and avoid talking to them hoping that their financial situation will get better may be too late in stopping foreclosure process:

  • If the lender does file a notice of default, it might be too late in stopping foreclosure process

Most lenders are reluctant to work with a homeowner who is in default and well into the foreclosure process because their options may be limited.

Alternatives To Stopping Foreclosure Process: Sell, Short Sale, Deed In Lieu

A homeowner facing foreclosure should not procrastinate and act on ways of avoiding foreclosure, whether it is contacting their lender or trying to sell their home.

  • Contact a realtor in the area and get market analysis to find out the value of the home
  • If the home is upside down where homeowners owe more on mortgage balance than the value of the property, see if the lender is willing to accept a short sale
  • Need permission by the lender to sell the home below the price of what is owed on the mortgage balance

Another alternative to foreclosure is a deed in lieu of foreclosure where the mortgage lender is willing to accept the keys of home and avoid a deficiency judgment in lieu of foreclosure.

Filing Bankruptcy To Stopping Foreclosure Process

Filing Bankruptcy is one way of stopping the foreclosure process.

There are two types of bankruptcies:

  1. Chapter 7 Bankruptcy
  2. Chapter 13 Bankruptcy

Homeowners contemplating filing bankruptcy to save their homes should consult with a bankruptcy attorney who is experienced in real estate law.

Qualifying For Mortgage After ForeclosureWhat are Alternatives To Avoid Foreclosure

Many homeowners who are frantically trying stopping foreclosure process often do so because they are under the belief that a foreclosure will ruin their chances of qualifying for a mortgage after foreclosure. There are waiting period requirements after bankruptcy and/or foreclosure to qualify for government loans and conventional loans. However, there is no waiting period after foreclosure and/or housing events with non-QM loans.

NON-QM Loans Require No Waiting Period After Bankruptcy And Foreclosure

Home Buyers can qualify for non-qm loans with no waiting period after the following:

  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale

20% down payment is required and mortgage rates are higher on non-qm loans. Alternative Financing such as non-QM loans and/or bank statement mortgage loans for self-employed borrowers is a great program to use it as a bridge loan until borrowers qualify for traditional financing such as FHA, VA, USDA, and Conventional Loans.

Qualifying For Mortgage With Direct Lender With No Overlays

Borrowers who need to qualify for a home loan after foreclosure with a direct lender with no lender overlays on government and conventional loans, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays.

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