Prevent Home Equity Loan Foreclosure - Tips For Avoiding
Home equity loan foreclosure cases are part of the overall foreclosure happenings that have been on the rise since the housing market collapse a couple of years ago. Home equity loans (HELs) are often used for home improvements or other expenses for the home. The loan can be at a fixed or variable rate and it is secured by a mortgage lien. So what happens when you have a home equity loan which is, as previously stated, secured by your home, and you foreclose on your home. You will most likely still be responsible for the loan that you have taken out. Obviously, your home can no longer be used as collateral for the loan, but you will then have a personal liability.
The creditor will probably proceed with collection action if you are no longer paying off your loan, and they may even file a lawsuit against you to get the money that you owe them. Also, if, after the foreclosure, the auction of the home does not cover the full balance of the first mortgage, then you could also be responsible for what is termed a "deficiency balance" on that first mortgage. And this too could result in more collection activity and/or lawsuits against you in order to collect the payment owed. If, on the other hand, the earnings from the auction do cover all of your mortgage and home equity loans, it is quite possible that you can breathe a sigh of relief and be free of any obligations. If you are undergoing a home equity loan foreclosure, then you need help and support.
There are not many worse experiences than going through a foreclosure and losing your home, possibly one that you have lived in for quite a while. That is the most immediate impact, but you also will suffer a long-lasting impact on your credit score, which can hurt you in all of your future endeavors. If you are not yet in foreclosure, or if you just feel that your situation is getting out of control, then you should first contact your lender. You may qualify for a “special forbearance” which really just means a modified payment plan. You could also try refinancing your mortgage so that you are able to afford it. Or, you may even be able to qualify for a FHA “partial claim” which makes a one-time payment to catch you up-to-date with what you owe. Remember too that while the thought of losing your home scares you, it also very much scares your lender. If your home goes into foreclosure, your lender will very likely lose money, and whether they do or they don't lose money, they will go through a lot of paperwork, and spend a lot of extra time and effort on your foreclosure. In order to prevent home equity loan foreclosure, get in touch with your lender as soon as possible.
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