What options do I have once
I've received a foreclosure notice?
You may be able to do a loan modification or refinance the debt and/or extend the term of
your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may
qualify if you have recovered from a financial problem but your net income is less than it was before the default
(failure to pay).
When your lender files a Partial claim, HUD will pay your lender the amount necessary to
bring your mortgage current. You must execute a promissory note, and a Lien will be placed on your property until
the promissory note is paid in full. The promissory note is interest-free and will be due if you sell or leave your
property, or when your mortgage matures.
As a last resort, you may be able to voluntarily "give back" or what is called "Deed in
Lieu of Foreclosure" of your property to the lender. This won't save your house, but it will help your chances of
getting another mortgage loan in the future.
With a "deed in lieu of foreclosure", you give your home to the lender (the "deed"), and
in exchange, the lender cancels the loan rather than foreclosing on the property. In most states, a lender is
allowed to sue you to recover any remaining deficiency-the difference between what the lender can sell the house
for and what you owed on the mortgage. Before you agree to a deed in lieu of foreclosure, make sure that the lender
agrees, in writing, to forgive any deficiency that exists. Deeds in lieu of foreclosure are not possible if there
is a second mortgage, unless the same lender owns both loans.
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