Stop Foreclosure Broomfield: The Role of the Government

In 2008, things started going south for many homeowners, with lenders working hard to try and save what they could through foreclosures.

Many people tried what they could to stop foreclosure Broomfield, but some were unable to find workarounds with their lenders. At the time, the Federal government decided to intervene in order to prevent more people from becoming homeless.

Foreclosure is a simple, although technically complicated, process used by lending institutions such as banks when it comes to recovering loans by repossessing property that the loan was aimed for and reselling it in order to recoup their losses. Usually, the whole process of foreclosure kicks off when a homeowner starts missing their monthly mortgage payments.

One then wonders what really transpired. How come someone didn’t know or rather forgot to pay their loans or mortgage? Apparently, no one forgot or didn’t know they were supposed to pay back their loan, however, there are other things that can push someone to a point of fighting to stop foreclosure Broomfield.

One such thing is loans that include increasing interest rates or rather subprime mortgages. This is where the introductory interest rates are usually low and less likely to affect any person’s financial status, but with time, the rates become incredibly high. One interesting bit of this is that people who opt for increasing interest rates usually have low credit scores, which means when the rates skyrocket, they will not be in a position to make higher payments.

To ensure that people were no longer falling victim of foreclosures due to subprime mortgages, the government steps in through the Secretary of the Treasury at the time, Henry Paulson, and unveiled a financial reform plan aimed at preventing borrowers from getting stuck in loans.

It has also been pointed out that value of homes can play a huge role in foreclosures. When the value of a home declines below what the owner owes on it, the chances of getting into foreclosure are 20% higher since the affected has nothing to bargain with or refinance, especially this is likely their only asset. Homeowners are more likely to default on their loan payment once they realize that the value of the house has declined beyond the loan balance. When the number of homes on the market due to foreclosure keeps on rising, it’s possible that the value of houses will go down.

Besides the subprime mortgages, losing a job is another causal agent of foreclosure. If you pick up a loan when working and suddenly lose your job after paying for a few months, it will obviously get harder to continue making the payments and sooner or later, your lender will be knocking on your door with a foreclosure notice. In this regard, there is also a massive role that the economic performance of the market plays when it comes to foreclosures.

Other cases where foreclosures end up as the result include divorce, illnesses and medical reasons and some are simply unable to sell the house in order to stop foreclosure Broomfield. Yes, you can sell the house and use the money to clear the owed loan, which is a great way of avoiding foreclosure even when it’s right on your door.

The role of the government

While the government cannot do anything to stop foreclosure once a notice has been served, there are a few strategies the Federal government uses to help prevent widespread cases of foreclosure. Since foreclosures can cost lenders up to a tune of $50,000, they’d prefer another solution to this problem than proceed with the foreclosure. In most cases, the lender will sell the house at a price that equals what you still owe and possibly cover their expenses.

Through the Home Affordable Refinancing program, homeowners can refinance their loans at a lower rate, but this only applies to those whose homes are experiencing an abnormal decline in value and have not defaulted their payments. The Home Affordable Modification plan targets those with mortgage payments of more than 31% what they earn (gross) on a monthly basis and have recently had some issues such as medical bills and so on. Here, the lender and homeowner will come up with a new plan that works better for the latter.

You can get into the Second Lien Modification Program for those with second mortgages. Here, lenders are enticed to forgive homeowners’ second liens or maybe lower their rates. The government also offers a Home Affordable Foreclosure Alternatives program where the homeowner can make a short sale, where the property is sold at a loss as long as the lender gets their money back; or offer a deed in lieu to stop foreclosure Broomfield, where the borrower surrenders the ownership of the house to the lender and thus will not be required to pay off what they still owe.

Either way, the homeowner will be entitled to up to $3000 from the government to assist with the relocation process.