Missing two mortgage payments in New York will often trigger a foreclosure, which is a legal process where the lender takes possession of a borrower’s property to repay their debt. Foreclosures can be devastating for homeowners and have long-lasting impacts on their financial well-being. However, there are four ideal ways to avoid or stop this process from happening, and they include the following.
Reinstate your mortgage
According to New York real estate law, you typically have until the day the court offers its final judgment on your home sale to reinstate your mortgage. Within this period, you can pay up all the missed payments, late fees and any other outstanding charges.
Ensure to confirm the full amount with your lender before you start to avoid facing any legal repercussions. The lender must then accept your payment and halt the foreclosure process.
Apply for a loan modification
Applying for a loan modification involves negotiating with your lender to modify the terms of your mortgage to make it more affordable for you. The new terms may include reducing the interest rate, extending the loan period or changing from an adjustable-rate to a fixed-rate mortgage.
File for bankruptcy
Bankruptcy may seem like an extreme measure, but it can be a viable option for avoiding foreclosure. When you file for bankruptcy, the court places an automatic stay on all debt collection, including foreclosure proceedings. This gives you time to restructure your finances and potentially keep your home.
Sell or transfer ownership of the property
If reinstating your mortgage, applying for a loan modification or filing for bankruptcy are not feasible options, you can consider selling or transferring ownership of the property. Note, however, that the lender should give you a ‘go-ahead’ for a short sale or lease option before you proceed and then approve any potential buyers or tenants.
Steering clear of foreclosure, while challenging, is certainly achievable with the right knowledge and strategy. Consider your unique situation and determine which option suits you best. In whatever you do, remember that communicating with your lender is crucial throughout this process.