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Loading ...Almost 2.4 million homeowners have succumbed to foreclosure as the housing market spun south in 2006, and that number will increase to six million before it will be over. Below are some things every homeowner should know about fighting foreclosure.
Aid from the Federal Government
The federal government has offered several programs to help homeowners battle foreclosure. These include the Hope for Homeowners program, Hope Now Coalition and FHASecure. However, critics believe that these programs are so tightly focused as many homeowners who are in need of help are left out.
Major retail banks like Bank of America, JPMorgan and Citi and the Federal Deposit Insurance Corp. have also developed programs directed towards homeowners who are currently or will eventually be stuck in the foreclosure dilemma.
In addition, the Servicemembers Civil Relief Act enables you special rights on mortgage interest and foreclosure for being part of the military or a veteran. Also, homeowners aged 62 or above may be able to pay off their debts through availing the reverse mortgage.
Lenders and Loan Servicers
As soon as you sense that you may miss a payment, seek assistance through your lender or loan servicer. Discuss for a longer-term loan adjustment to make your mortgage more reasonable. Also, you can have a certified housing counselor to mediate on your part as they have direct connections into all of the major servicers of loss-mitigation departments.
Letting Go
A short sale is another option. These are facilitated best by an experienced real estate agent who can settle the problems given by lenders or investors. Another strategy would be acquiring a deed in lieu of foreclosure, which lets you sign over the deed of your property to your lender, who pardons what you owe.
Credit and Taxes
Going through a foreclosure, short sale or a deed in lieu of foreclosure denotes that you have settled your mortgage account and have given your consent to resolve the debt for less than you owed. That fact will remain on your credit report for seven years. You can start reconstructing your credit profile at once, but lenders may opt not to lend to you again for a certain period of time.
Something to be Optimistic About
Congress recently prolonged a tax relief until 2012 on any debt considered as part of a foreclosure, short sale or a deed in lieu of foreclosure, or a loan modification as long as that debt was used to purchase, construct or enhance your primary home. You will still have to report the cancellation of debt on Form 982 and affix it to your tax return, even though the debt is not regarded as taxable income.
