Stop a Foreclosure If You Miss a Mortgage Payment
The minute you miss a mortgage payment, you have to move quickly in order to repair the damage that was done. Essentially, you have an average of ninety days in which to reverse this problem. After this period, if nothing is done, the home will then move to foreclose the property. Ninety days may seem like a long time, but when you're talking about mortgage proceedings and tons of paperwork, you'll need all the time you can get.
The first thing you need to do is own up to the problem and contact your lending institution. Ask to be connected to the loss mitigation department and speak to someone there. Once you've explained why you had to miss a payment, discuss your options with the lending institution. Most likely, what will be offered to you are a loan modification (where either your interest rate or term of payment will be altered), forbearance or a contract to delay the foreclosure which would allow the borrower to catch up with his payments, a short sale or the sale of the property for just about the value of the mortgage balance, or a refinance using equity meaning the restructuring of the loan where the portion already owned by the homeowner will be used to add collateral to the balance of the loan.
If the problem is temporary, a loan modification or a forbearance would be your best option. This will give you breathing room for about six months or a year in which lower payments are collected in order to bring the account up to date.
A short sale would be the best solution for everyone if the situation seems to be more permanent. The bank would receive the bulk of the money owed, the borrower would have only a small debt left to pay, and the buyer would have a new piece of real estate.
In order to press for these changes, written documentation is essential. A hardship letter detailing the problems that you are going through, a list of your monthly expenses and the corresponding bills, your bank statements, W-2 statements, and your 401-k statements. There is no such thing as too much evidence when you are looking to stop a foreclosure.
Don't lose touch with your lending institution after your problems are resolved. Keep up communication with them while you are going through the repayment term. After all, if they are up-to-date with what's going on with you, it will be easier for you to avoid foreclosure.