The foreclosure process is started by a bank or lender after a homeowner has failed to comply with the terms of their mortgage contract; the most common compliance failure is not making the agreed upon mortgage payments. The lender will get a court order to take control of the property with the intention of selling it at auction to repay the outstanding mortgage debt and any other expenses the lender may have incurred as a result of the foreclosure proceedings.
There are many reasons why people fail to pay their debts; sometimes it’s because of a serious illness, maybe the death of a loved one, a job loss, divorce and yet for others it simply boils down to a complete lack of fiscal responsibility – amassing more debt than their income can pay for.
The best case scenario is to avoid a foreclosure if possible and here are some options you may want to share with clients who are at risk of foreclosure.
Bank of Mom & Dad
I’m not a huge fan of the Bank of Mom & Dad. Millennials need to get off the parental payroll and onto their own feet, financially speaking. But making use of friends or relatives either by asking them to pay off the entire debt or helping with refinancing by co-signing a mortgage loan is one option which may help some clients to avoid foreclosure.
Foreclosure is a scary word, and it should be. It signifies a loss of control over your home and your financial stability; the social, emotional and financial consequences of foreclosure also come with long-lasting implications.