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There are some ways to avoid foreclosure of a home

The housing crisis has led to some changes in the way banking and lending institutions handle delinquent mortgages. Most likely, the decision to walk away from a home and allow it to go into foreclosure is not made without careful reflection. However, Washington families that have been contemplating this step may be encouraged by the recent changes.

One of the changes is the requirement that lenders must provide written notification before a homeowner becomes 45 days behind in payments. Along with the notice, the mortgage holder must provide information concerning steps that can be taken to avoid a bank seizure. In addition to the new requirements for lenders, the government has implemented two other options for troubled borrowers.

The two programs are intended to aid in either the refinancing of the loan or a modification of a current plan. Both may enable the homeowner to remain in the house and bring the loan current. Conversely, for those who desire to get out of the loan, there is the option to short sale the property with the lender's approval, or to turn the deed over to stop the official foreclosure process. Either of these options, though, may reflect negatively on the borrower's credit rating.

In spite of these programs and options, there may be times when another solution would be more beneficial. Washington families that are struggling to keep a roof over their heads while also juggling heavy debt may seek to educate themselves concerning the benefits of a bankruptcy filing. While this step will delay a foreclosure, it may not permit the petitioner to retain the property. Instead, it may allow the family to achieve a fresh start altogether without the stress of suffocating debt and a mortgage that may be too burdensome to continue to support.

Source: blog.credit.com, "What Happens If I Stop Paying My Mortgage?", Chris Birk, July 15, 2014

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