Are there laws that safeguard against home foreclosures?

One of the biggest nightmares anyone can face is to be served a notice of foreclosure. Many people are faced with mortgage foreclosure daily. According to a CNN report that was released recently, 650,000 homes have been repossessed. That is an average of 1 in every 194 homes has foreclosed.  These figures show that foreclosure has increased 57% opposed to a year ago.  The sad part is, there does not seem to be a quick fix to this increasing nightmare for home owners.

This concurrent nightmare has congress and political parties up in arms in debate on which road to take, to not only protect the buyer/home owner but to also protect the lender. They are trying to constitute foreclosure laws that help all concerned but they can’t seem to all agree to produce lasting results.  There is a lot at stake for today’s economy and for those facing a foreclosure.

One of the newest bills that are in the most controversy is the Foreclosure Prevention Act of 2008.  This bill is designed with good intentions of easing a mortgage foreclosure.  The main proposition is to include funding for counseling, and modifications to bankruptcy law for the courts to modify the home mortgage loan during the bankruptcy finalization to avoid the final foreclosure.

According to the Wall Street Journal, members of the House Judiciary Committee has agreed that the terms would give judges the chance to reconstruct the terms of the mortgage notes.  This law will not be voted on till sometime in 2008. President Bush plans to veto the bill, but with a back up plan that will advance homeowner bail out plans. These plans are still in the works but it will begin by expanding the FHASecure. This plan transfers the mortgage to prime rate mortgages that are insured the by the Federal Housing Administration.

There are other bills as well waiting for approval in senate include one that would give the FHA power to help more borrowers facing difficulties and one that would change the mortgage lending and securitizing process. Reports from the Wall Street Journal indicate that members of the House Judiciary Committee have agreed on the terms of a law that would give bankruptcy judges more leeway to alter and restructure terms of mortgages. Despite this promising turn, sources indicate that the full House will likely not vote on the bill until 2008. Bills awaiting approval in the Senate include one that would give the FHA power to help more borrowers facing difficulties and one that could change the mortgage lending process. The pitfall to all these new bills is it would put a freeze for five years on interest rate adjustments for home owners with adjustable rate mortgages. But in order for homeowners to qualify, they have to be current on payments and living in the home with the adjustable rate mortgage. This will not help all homeowners avoid foreclosure.  There are currently 2.2 million facing mortgage foreclosure and this will only help about 7%.

Mortgage foreclosure allows a lender to recover the amount owed on the home loan by selling or taking possession of the property that secured the loan. When a mortgage foreclosure process begins, the owner has defaulted on more than one payment. States and lenders differentiate the foreclosure law on how many payments or months of delinquency lapse before a note to secure by default is made.  The lender then files a public default notice called a Notice of Default.

The first and foremost important step is to try and stay calm. Notify your lender before you are past due on your account. Most homeowners have other options to make payments and avoid foreclosure.
Try to work out an agreement that will work around what you can feasibly pay on time, don’t set goals that you know you can not own up to.  This will help the lender see that you want to save your home from foreclosure.
 There are four ways that a foreclosure process can end.
1.    Reinstate the loan by paying off the defaulted amount
2.    Sell the property to a third party before the end of the grace period to protect the credit
3.    A third party can buy the property at a public auction at the end of the pre-foreclosure period.
4.    The lender takes ownership with the intent to resell for amount owed

Most of these processes are too in-depth to handle alone, not always is there time to do it on your own. Take a pro-active stand regardless of the circumstances to avoid foreclosure. Contact a mediator to help you if needed. Foreclosure should and can often be avoided; with a little effort you can save your home from foreclosure.

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