What can seem like a great deal for a person on one day can quickly turn into a difficult situation the next. This is true for many Colorado homeowners who entered mortgage agreements thinking they were buying a home that would serve them for years only to later encounter significant difficulties in making payments under that mortgage.
Individuals who miss mortgage payments have a few options they can take advantage of in order to cure the situation. For some, a loan modification may be an option, which is where a person works with his or her lender in order to revise the terms of the mortgage agreement. There are setbacks to this option, however, that might not make it the best solution for many. For one, there is not right to modify an agreement. Essentially, the lender retains control over the decision of whether to negotiate with the homeowner. Therefore, some may be out of luck if their lender does not want to revise the terms of the mortgage.
Second, lenders may try to seek foreclosure on the home even while they are working with the borrower to modify the loan. This may no longer be the case, however, if a Colorado bill passes into law, which would prevent lenders from moving ahead with a foreclosure sale if a loan modification is pending.
Ultimately, there may only be one sure fire way to stop foreclosure, which is by filing for bankruptcy. Through a bankruptcy proceeding, a court will impose an automatic stay over all collection activities, including a foreclosure process started by a lender. During this time, individuals may be able to save enough money to become current on their mortgage.
Individuals who are under threat of foreclosure should work with an attorney to determine whether bankruptcy is the best option for them, and to learn how the process works. Individuals can then move forward with a fresh start by ridding themselves of the debt that has burdened them.
Source: Denver Post, "Bill to protect Colorado consumers in mortgage default advances," Aldo Svaldi, Mar. 18, 2014