Mortgages make homeownership accessible for millions of people. Most people cannot save enough income to make a cash real estate purchase. Mortgage lenders provide the capital necessary to acquire real estate. They treat the purchased property as collateral for the loan.
This arrangement works well in most cases. Unfortunately, financial setbacks may leave people at risk of foreclosure. Job loss, divorce and medical issues are among the unpredictable circumstances that could push people to the edge of foreclosure. Those worried about the possibility of losing their homes likely need to develop a viable foreclosure defense strategy sooner rather than later.
When is foreclosure a concern?
Federal and state statutes help protect homeowners from summary foreclosure and the loss of their homes. Lenders typically cannot foreclose until homeowners have missed four payments in a row. At that point, they need to come up with a large amount of money to catch up on payments or may only have the option of redeeming the property by paying off the principal balance.
Those who have experienced multiple months of financial hardship are unlikely to suddenly have the capital necessary to cover four missed payments simultaneously. They may need to prepare a foreclosure defense strategy to avoid the loss of their home and the equity that they have accrued in it.
While people may feel embarrassed about foreclosure, it is a somewhat common experience. Thousands of people face foreclosure every year, and some of them successfully avoid it. In 2024, the foreclosure rate was 0.23%, which is relatively low. For the sake of comparison, the highest foreclosure rate reported in the last two decades was in 2010, when lenders had to foreclose on 2.23% of mortgages.
What are foreclosure defense strategies?
There are different foreclosure defense strategies available depending on an individual’s circumstances. In some cases, lenders may have violated regulations regarding mandatory notice and other aspects of the foreclosure process. Technical errors on the part of a lender can provide the basis for a defense strategy in some situations.
Other times, pursuing a loan modification can be a viable tactic. The lender may agree to adjust the terms of the mortgage. Increasing the repayment period and diminishing the monthly amount due can help people keep their mortgages in good standing. Borrowers might even be able to move missed payments to the end of the repayment period instead of facing demands to pay multiple payments simultaneously.
In some cases, a personal guarantee from an outside party with assets or income, such as a parent, could help incentivize a lender to halt foreclosure proceedings. The best strategy depends on the circumstances leading to foreclosure. Those feeling concerned about the possibility of foreclosure typically cannot calmly navigate foreclosure defense issues on their own behalf. They need the insight and advocacy of a professional familiar with the law.
Hiring an attorney when facing foreclosure can help property owners explore all of their options and protect what is likely their biggest investment. An effective foreclosure defense strategy can help people facing financial hardship preserve their resources and rebuild after temporary financial setbacks lead to missed mortgage payments.