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Foreclosure laws

Myth: The bank wants your house

Truth: The bank almost never wants your house, they want the money they lent you paid back with interest. In fact, banks usually hate going through the foreclosure process and will bend over backwards to work with homeowners in avoiding a foreclosure. Often the bank's flexibility still doesn't go far enough in stopping the home foreclosure.

Myth: The bank will not take my payments, I can do nothing else

Truth: At some point many banks say if you do not pay all of your arrears in full they will not accept a partial payment. Maybe a month later you get that figure together only to find the bank sends it back because another month has gone by and now the "all or nothing" requirement has grown. Do not fear! consult a mortgage negotiation professional can set up a plan for you to pay The foreclosure process stops and as long as you stick to the plan you keep the home. Donít miss a payment under the new plan or the foreclosure process can pick up where it left off and banks rarely give second chances with this type of plan for avoiding foreclosure.

Myth: I received a foreclosure notice; I have to move out now

Truth: Most states have a very long foreclosure process, even after failure avoiding foreclosure you do not have to move. Following a foreclosure you must go through an eviction hearing. Eventually you will be physically removed. I'm not suggesting you hold out until the end, but making sure you know you get to stay and fight if you want. Time can be on your side if you take action early and don't waste the opportunities for stopping the house foreclosure.

Myth: If I go through a foreclosure I can never buy a house again

Truth: From a banking point of view foreclosures can be viewed as one of the worst things ever on a credit report. Even so, some banks will make you a loan years after a foreclosure. Be prepared for very large down payments and high interest rates. Most often the terms of these loans may take 4-7 years.

Myth: On the foreclosure auction day everyone in the world is going to invade my house

Truth: While some foreclosure sales may be held "at" the property no one will come inside unless you invite them.

Myth: A chapter 7 bankruptcy will stop my foreclosure and save the house

Truth: A chapter 7 bankruptcy will stop the home foreclosure on a temporary basis only. Eventually you need to do something else to keep the house in the long run if you are facing foreclosure.

Myth: Homeowners can come up with all sorts of creative ideas for stopping home foreclosure and the bank will go along with the smart plans

Truth: Bank's organizations in most cases involve complex bureaucracies and specific procedures. Most times the smartest plans remain destined for rejection. Stick to a plan within formats and parameters the bank works with everyday for avoiding foreclosure, get a professional to help you if needed.

Myth: I have to do everything I can to save the house and continue to live in it

Truth: Sometimes the whole foreclosure procedure can be avoided with a "deed in lieu of foreclosure" negotiation where you and the bank agree to the terms for giving the house back to them in a less adversarial manner. In exchange they may forgive some of the money you owe .

Myth: When the bank takes the house our dealings are done, they got the house back

Truth: In many states if the house sells for less than you owe them even after the foreclosure you will still owe them the amount of the "deficiency", meaning the difference between what they got and what you owed. They can still get interest on that too. If you think you will face a deficiency you should think harder about a deed in lieu of foreclosure where they will forgive it or a chapter 7 bankruptcy where it can be wiped out. See a chapter 7 bankruptcy attorney in your state if you have questions.

Myth: Even if I get together all of the money I owe the bank once I'm deep into the foreclosure process it's too late

Truth: In most states if you have all of the money you owe the bank for back payments and legal fees, late fees etc, they have to take it and stop the foreclosure. It is not their choice it is the law, but where it applies you need to catch up "in full".

Myth: I'm getting foreclosed on and I'm going to go to jail

Truth: You may lose your house, but you don't go to jail for not paying the mortgage.

Myth: I have not paid my mortgage in months and no one has contacted me. I think I can stay here forever and not pay anything

Truth: Sometimes, especially when banks or loans change hands, files get misplaced or there is a transition period where nothing happens. Eventually you will hear from the bank. You can not be successful stopping foreclosure by avoiding the mortgage problems.

Myth: Once the foreclosure sale happens you can never get the house back

Truth: Sometimes this one is true, but in some states people have "redemption" rights where they can keep the house if they can pay the bank off in full, principal and arrears, within a limited time period. In other cases you can still buy it back after the foreclosure, but that remains a rare case.

Myth: The foreclosure date is too close, there is nothing I can do

Truth: Sometimes minutes before the foreclosure sale a Chapter 13 bankruptcy will stop the auction. Don't wait for things too get this close, but I have seen it done. You will be better served to have things prepared with a lawyer at least a week or two prior to the foreclosure date.

Myth: If I file a chapter 13 bankruptcy I get to keep the house automatically no matter what

Truth: If you file a chapter 13 bankruptcy AND you have a chapter 13 approved by the court AND you make ALL of the payments under the plan you can keep the house.

Myth: When they foreclose on my house they take all my stuff

Truth: You keep your personal property, but permanent attachments to the house should stay like light fixtures or a dish washer.

Myth: The bank can't expect ME to pay THEIR legal fees

Truth: Oh, yes they do, and don't expect it to be cheap.

Myth: When a judge hears my sad tale they will not kick me out

Truth: You may get more time, but you will only be stopping the action for a while, eventually you will go.

Myth: No one can help me in stopping my home foreclosure

Truth: Many methods and many professionals can help avoiding foreclosure.