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How can I save my house from foreclosure once the bank starts the process?

We bought a house a couple years ago in Texas. We live in this house. We are self employed and the economy had hit us pretty hard. We have not made a house payment in five months. Money is starting to come in again and we can now afford the $1200 a month, but we can not afford the back debt. We called our mortgage company (Suntrust) and they told us we had to talk to a loss mitigation counselor. We received a letter stating the house will be sold on January 7th. The loss mitigation people are telling us we have to wait for them to call us before they can help. They say it takes up to 30 days to receive a phone call. Well, if we wait for them to call, the house will already be sold at auction. What can we do? They will not talk to us at all. We do have a HUD backed loan. We have called Hope Now and that did not seem to help. HUD has a wealth of information online about reinstatement, forbearance, and repayment plan options. We can not contact anyone to help us try to qualify for these options. If we can not reach loss mitigation, what are our other options? We received a couple letters from lawyers regarding bankruptcy. The letters mention chapter seven and eleven. If we can save our house with bankruptcy, what is the best way? Any ideas on how to get loss mitigation to grant us some extra time so we can work for them? Thank you for all your help.

Public Comments

1. Hello, I live in Florida and I own a real estate investment company, this is what I personally know about this situation. Once you receive a letter that the foreclosure process has begun, all hope for regaining the property back is lost. Of course you could try to negotiate with the bank but usually that doesn't work out. The law down here is that once the letter has been received, even if for example I buy it, I can not let you rent or live at that property at all. But whatever you do, do not file for bankruptcy, you will have horrible credit and you can forget about loans for anything or getting good interest rates. Don't get your hopes down though, I don't know everything, your best bet at this point is to contact a local real estate lawyer so he can give you your options. Hope this helps
2. You may want to declare Chapter 7, but this means you would have to cease your business practices. Chapter 11, you can keep your business as long as you are able to arrange a payment plan for everything you owe. Many bankruptcy attorneys will do a free initial consultation and will advise you on which chapter to file and also WHEN. Timing is important. I lost my own small business last year and it saved us completely; just be sure you have some income you can live off of, even if it's temporary or PT temporary. I gave up on my business and went back to working for others -- you just can't take risks now the way we could two years ago...Good luck! PS - Bankruptcy does not ruin your rep forever; in about six months with hard work, you can restore your credit to something workable and also you will actually have an easier time getting people to lend to you once you've declared (since you can't declare again for another 10 years and you have no current obligations post-discharge). Of course, try not to borrow too soon or else you may find yourself in the same hole, only with higher interest rates!
3. Here are some of your options. Hopefully this gives you some ideas to begin researching and a few of them might work in your situation. 1. Defend the lawsuit as long as you can to stay in the house mortgage-free for months or years. 2. Save up or borrow money from family to get the mortgage back on track completely. 3. Work with the lender's loss mitigation department for a loan modification. 4. Work with the lender's loss mitigation department for a repayment plan or forbearance. 5. If you have an FHA loan, use the partial claim. 6. Sell to a private investor and lease the property back until you can purchase it again. 7. Sell the house on the open market and move out. 8. Sell the house at a short sale for less than the total amount you owe the lender. 9. Offer the bank a deed in lieu of foreclosure. 10. File bankruptcy to stop foreclosure or have the debt discharged. 11. Refinance through a hard money lender or specialized foreclosure lender. 12. Just walk away from the house, let it go into foreclosure, and move on with your life. Hope that gives you some ideas. Good luck. ForeclosureFish