Bank Repayment After Foreclosure

Although it is a difficult process, it is quite possible to repay a loan after your home has gone into foreclosure to save your residence.   Generally, a forbearance will stop the bleeding and then a repayment option will need to be chosen.

I’ve gone into foreclosure, can I still repay my bank loan and recover my home?   The answer to this question is surprising to some, but often it is yes.   It will require you to make some hard financial decisions for yourself and your dependents but often a person can indeed recover a home in the beginning stages of foreclosure.

How to Start the Process: Communication, Communication, Communication

One thing to remember during the entire foreclosure process is to have as much distance and maturity from your situation as possible.   First of all, up to 40% of individuals stop communicating with their lending institutions, another rising percentage of individuals begin to destroy the home in which they live. 

These counterproductive measures may not only cause you much more legal jeopardy, but they can make your financial outlook so much worse than if you had kept a cool head. 

Remember, dealing with a bank is going to be a difficult process because they often find that threatening you with harsh measures is the most effective way to get you to repay your loan.   But if you learn what options are available to you even at this stage, you may be able to recover your home or credit much faster.

There are several options available to a  person who has gone into foreclosure.  The lending institution first has to be asked to stop the sale of your home.   You can then request a forbearance, repay the loan in full, or you can acquire a loan to repay your foreclosure.   Congress has also recently passed legislation which will require lending institutions to be more generous about agreeing to allow you to repay your loan http://www.sourcewatch.org

You’ll first choose which of these options will best work for you, then you’ll contact your bank and ask them to stop the sale of your home so that you can implement your plan.

Available Repayment Options

Pay in Full – obviously this is the least likely available option to a person in foreclosure, but there are circumstances in which it is feasible.  If you have an inheritance, a relative willing to help you out of a jam, or another option now is the time to use it.   If you can tell the bank you will repay the loan in full you will be able to keep your home and get out of foreclosure immediately.

Forbearance— this is an agreement in which the bank allows you a short period in which to forgo having to repay the loan.  It’s only with the express understanding that you will embark upon another option immediately afterward. 

As with all agreements you make with your bank, you must begin to seriously prepare to pay back your loan, so begin to find ways to save and acquire money during this crucial time.

Repayment Plan—in this case you may agree to pay the amount you are in arrears for a short period of time until you are caught up, or you may be able to get the lender to modify your mortgage by adding a few years onto it.

Loan—this is the classic case of borrowing from Peter to pay Paul but it is an excellent option that may save your home.   In this case, there are numerous state entitites that are willing to help that can be located on the Housing and Urban Development agency’s website http://www.hud.gov/local/index.cfm.

When dealing with your housing foreclosure repayment option, it is important to stay in contact with the lending institution.  Even after your home has gone into foreclosure, if you’re one of the 40% of people who have not contacted your bank now is the time to do so.  Make a repayment plan, and make nothing but promises you intend to keep.