Prevent Government Foreclosures

How do you prevent government foreclosures? Well, generally the same way as you would prevent foreclosures by banks or other lending institutions- by paying the mortgage instalment.

However, it must be said that government foreclosures are a bit more comprehensive in terms of the possible causes of foreclosures. To help you prevent foreclosures, here’s a little rundown on how the government acquires the property and on what grounds they might be able to start foreclosure proceedings.

How and When Government Foreclosures Occur

Financial institutions like Fannie Mae and Freddie Mac insure homeowners who are unable to afford the usual high cost of mortgages to prevent foreclosure under normal circumstances. This means that they basically vouch for the homeowner which in turn lowers the interest rate on the loan and subsequently lowers the required instalment. Unfortunately life doesn’t always go as planned and the homeowner defaults on a payment (or more, depending on the terms of the contract). As a result the lender approaches Fannie Mae and Freddie Mac to ask for the full outstanding balance on the loan. The conclusion is that the government owns the property and then sells it to a new buyer.

Other government entities capable of seizing property and then proceeding with government foreclosures are the I.R.S, customs and various smaller government agencies.

The new buyer is in the fortunate position of buying the government-owned property at a reasonably low price. However he or she (or they) will be subject to more than just the mortgage payments and will therefore need to meet more responsibilities to prevent foreclosures:

1. Taxes

2. Utility Bills

3. Fees

4. Mechanics lien

5. Etc.

If any of the above payments fall behind government foreclosures may soon follow. This of course gives rise to the question that asks “How do you prevent foreclosures?”.

First and foremost the best advice would be not to fall behind on payments on any of those listed above. Should that unfortunately not be possible, it is best to contact the lender immediately and discuss the conditions of the contract and whether there would be some way to modify the terms to prevent foreclosures. In the case of government foreclosures, keep in mind that it is a government institution which would be required to settle the outstanding amount on the house which would mean that the negotiation is with them.

In some cases a small loan might aid to prevent foreclosures, even government foreclosures. Refinancing is also a popular way of preventing foreclosures as is the short sale of the property. The latter requires the permission of the lender (the government where government foreclosures are applicable) as it usually has the implication that the lender loses an substantial amount of money.

The best advice however, remains to seek some advice when facing government foreclosure or when generally trying to prevent foreclosure. It has to be said, however, that there are always those “willing and helpful” companies out there who seek to make some money off those who are facing government foreclosures. Good salesmanship and clever tactics are employed to snare those seeking to prevent foreclosure in signing over their deeds or by unknowingly agreeing to refinancing conditions – funds of which the current homeowners will never see.

Employ the services of a legal advisor experienced in the field of preventing foreclosures who will be able to advise on the documentation of the financial assistance to be received. Where government foreclosures are concerned, they may even offer the services of their own employees to aid those wishing to prevent foreclosure.