This is part of our series “Stop Foreclosure in Your State.”

Foreclosure in any state is a complex process. There are deadlines, guidelines and variations that depend upon whether a state uses mortgages or deeds for the purchase of real estate. In Ohio, the lender issues a mortgage, which means that foreclosure is done through a court action against a borrower in default. Below is a table that illustrates the standard facts around a foreclosure in Ohio.

There are ways to stop foreclosure Ohio, though there is no redemption period (which would allow the homeowner to pay the outstanding balance and reclaim their home even after a sheriff’s auction of the property).

One of the simplest and most common ways for a homeowner to stop a foreclosure is to consider a loan modification. The government has recently poured billions of dollars into the mortgage industry in order to help banks offer easier modification programs to their clients.

Pursuing this course of action, however, is the responsibility of the borrower and not the bank, and even with the financial support of the government, not all borrowers will quality. All lenders are encouraging homeowners to contact them at the very first signs of financial difficulty.

This means that the best way to stop foreclosure Ohio is to recognize that it might be possible in the near future and take the necessary steps to prevent it altogether. Consider that the entire foreclosure process in Ohio takes roughly 217 days. While that seems like a lengthy period of time, it could begin as soon as a homeowner misses a single payment. This means that time is of the essence when working to stop foreclosure Ohio.

If the borrower understands that they are not going to be able to pay their mortgage they should sit down and draft an honest and realistic income versus expense sheet. This will accurately illustrate where their income is going and how much is really available for their housing. With this figure they can approach their lender to discuss their options in loan modification.

The modification process also includes some second mortgage products that can help a borrower get caught up in any back payments while also modifying the existing mortgage. This means that, in order to stop foreclosure Ohio, the borrower may have to pursue several different loans at a single time. This is the reason that many consumers are turning to loan modification companies to help them quickly and effectively stop foreclosure Ohio.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.

Short Sale Steps

Step 1
The first step is for the borrower to contact their lender and find out of their property qualifies for a short sale. The borrower must show a financial hardship. If the borrower has other assets that they could sell to pay off their mortgage, then the property will not qualify for a short sale, and the owner will have to find other options to try and save their home.

Step 2
The owner will then want to list their property for sale with a knowledgeable Realtor in the area. The Realtor will conduct a comparative market analysis advising the seller what similar homes in the area are selling for, and the Realtor will market the property to potential buyers. The seller and the Realtor must make sure they advise the potential buyer that the sale is a short sale so that the buyer understands the sale is contingent upon the seller’s third party lender approving the terms and price of the sale.  The lender will also pay the seller’s closing costs and brokerage commissions so the lender will need to approve the brokerage listing agreement as well at the time an offer is presented to the lender so there is the possibility that the lender may reduce the commission to the broker.

Step 3
The seller should also contact their real estate foreclosure defense attorney and meet with them to find out if there are any other options for them besides selling the home as a short sale, such as refinancing or a mortgage modification.  Also, the seller may want to retain the attorney’s service to negotiate the short sale on the seller’s behalf or hire a short sale company to negotiate the short sale. Many title companies will do this if you use them as the title closing agent since most of them have attorneys that work or own the title companies. It also depends on the laws of your state as each state handles real estate closings differently.

Step 4
Once an offer is negotiated with the buyer, the seller or seller’s authorized representative will submit a short sale package to the lender which includes the seller’s hardship letter, seller’s authorization letter authorizing the third party to negotiate on behalf of the seller with the lender, the purchase and sale contract, the copy of the brokerage listing agreement, if applicable, the seller’s last two paycheck stubs, W’2’s or 1099’s for the last two  years, two year’s income tax returns and most recent bank statement.

Step 5
Follow up is important once the short sale package has been submitted to the lender. You or your representative should follow up a few days after you send the package to make sure the lender received it. Then wait a couple weeks and follow up again to see if they assigned a negotiator. Keep calling on a weekly basis to find out the status. Once a negotiator is assigned, the process then goes faster.  Typically, the negotiator will contact the seller or the seller’s representative about 45 days from the time they are assigned.

The lender will counter the buyer’s offer, accept or not accept the offer. There is no guarantee that the lender will approve the short sale process.

Step 6
If the lender approves the short sale, then the buyer will provide the balance of the closing funds and the transaction will usually close within about 30 days or sooner from the time the lender approves the short sale.

Advantages and Disadvantages of Short Sales
The advantages to the seller are that they can sell their home without it going to foreclosure and completely ruining their credit, and they can walk away from the transaction not owing the bank any money. The buyer gets to purchase a property at or slightly below the current market value so they are happy.  The lender saves time and money having to institute a foreclosure proceeding. The brokers get paid their commissions by the lender, although sometimes they have to take a reduced commission.

Disadvantages of short sales are that half of them fall through because either the buyer gets tired waiting for an approval from the seller’s lender or the lender does not accept the buyer’s offer.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.

What to Do Before You Buy a Home
If you are thinking about buying a home, now is a great time because the interest rates are low and the home prices are affordable. However, if you cannot afford the monthly mortgage payment, insurance, taxes and maintenance fees, if any, then you may want to rent until you save up a larger down payment or your income increases.

Make a list of your assets, income and your debts and other expenses, leaving money for emergencies, and then you can see how much you can afford. Stick to your budget.

Being Responsible and Paying Your Debts on Time
Try and make a habit of paying your bills on time or early and avoid late fees and payments. It’s not a good idea to overspend. Don’t rely on your credit cards to pay your bills. If you get in the habit of staying on your budget and trying to save money as well, then you should be okay in case of a financial emergency. You should have at least 6 months of income saved in case of a job loss, wage reduction or illness or disability.

Of course, you never know what the future may bring, but being prepared can help save your home from foreclosure.

Communicate Early On With Your Lender
If you do get into an unexpected situation that is going to put you in a position that you will fall behind in your mortgage payments, contact your lender right away and discuss options you have.

Early communications can save your home from foreclosure. The lenders want to work with their borrowers. It costs them more money and time if they have to foreclosure on your home, which they don’t really want to do. There are options such as refinancing under the new Obama Home Affordable Modification Program and the Home Affordable Refinance Program
for homeowners who qualify.

Where to Get Help
You can get help by hiring a trusted mortgage modification company to help you negotiate a mortgage modification. Since the mortgage modification company has established relationships with lenders, it’s smart to have them negotiate your modification, and well worth their fee. Yes you could try and do it yourself, but most homeowners don’t have the experience or the time and patience to go through the process. In fact, they could end up wasting valuable time by not knowing who and how to apply for a mortgage modification.

You may also want to seek the advice of an attorney if the lender has already started foreclosure proceedings against you. The attorney and the mortgage modification company will be able to coordinate their efforts. If the lender has already filed a legal foreclosure action, the attorney is the only person who can defend you in a court action. The mortgage modification company can help negotiate the modification at the same time stopping the foreclosure action against you.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.

$75 Billion in Funds
Additionally, the United States government has provided $75 billion in funds to support what are known as “loan modifications”. This is, quite plainly, a renegotiation of a mortgage in order to make it payable by the borrower. For example, a borrower may have received a sub-prime loan for $400,000 with an adjustable rate over fifteen years, to purchase their home. They would have done this without any documentation of their ability to re-pay the loan (hence the sub-prime label) under these terms. Once the loan’s rates began to climb and the monthly payments became too high for the borrower to repay, they may have fallen into default.

Will I Still Face Foreclosure?
Luckily, they may not face foreclosure thanks to the government bailout which will support their efforts to adjust the loan to a term and interest rate they can actually repay. Unfortunately, it is not so easy for someone is also currently unemployed. Interestingly, as part of the government’s bailout plan, a borrower and a bank can discuss lowering the total amount of the loan all together.

Some consumers are surprised to hear that the bank would assume a loss on the loan, but the real fact of the matter is that most banks would rather take this sort of loss than to assume ownership of the home. Industry statistics prove that a bank will lose at least 30% of the entire cost of the venture if they foreclose, and then they will have to find a way to rid themselves of the burden of maintaining and paying taxes on the home as well.

A currently unemployed homeowner will still have income and financial documentation that can demonstrate to the bank what their financially capabilities will be for the coming months. With this in hand, the banks will work with their clients to renegotiate the entire sum of the loan and see if some sort of arrangement can be reached.

Working with a Loan Modification Company
For a short while there was a moratorium on all foreclosures, but now that the bailout funds are available, any homeowner can visit a loan modification company or expert to help them approach their bank or lender to see if any sort of arrangements, other than foreclosure can be worked out. Many people are incredibly surprised at how flexible their banks become when contacted in an honest and professional manner.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.

1. Contact your lender or loan service provider (see our Mortgage Company Directory) as soon as you know you are going to have trouble making your monthly mortgage payment. Communication is the key to stopping the process. Keep copies of all written documentation and notes regarding conversations that you have with your lender or loan service provider.

2. Consult with a professional such as a foreclosure defense real estate attorney, mortgage broker, lender, loss mitigation company or free housing counselor to find out the best options for your financial situation.

Get a referral for an attorney or contact your local state bar. There are numerous non-profit organizations that do not charge a fee for assisting you. Look for one that is certified by HUD (the Housing and Urban Development Department). You can Google one in your area.

Watch out for scam artists and others who are preying on the misfortune of homeowners, and avoid anyone who asks for fees upfront except an attorney, who is legally authorized to charge a retainer. Do not sign any legal documents transferring ownership of your property without an attorney’s advice unless you have made a decision to voluntarily sell your home.

3. Refinance your existing mortgage. With the new Obama foreclosure prevention plan allowing homeowners to refinance their primary residences with as little as 5% equity in their home, more homeowners will qualify to refinance now and be able to get lower monthly mortgage payments avoiding foreclosure. Only loans backed by Fannie Mae and Freddie Mac are eligible and the loan must be a conforming loan $417,000 or under. Prior to the new plan, homeowners needed at least 20% equity. You must be current on our loan though. The plan does not pertain to investment properties or jumbo loans over the $417,000 limit.

4. Loan Modification. Ask your lender if you qualify for a loan modification is you do not qualify for a refinance. A loan modification is different from refinancing as it is a modification of your existing loan and a not a new loan. Either the terms are extended, sometime debt is forgiven or the defaulted amount is applied to the back end of the loan. Again you must show income that you can pay the new mortgage so if you are not working or show sufficient income, you will not qualify for a mortgage modification or a refinance.

5. Deed in Lieu of Foreclosure. A deed in lieu of foreclosure is simply where you sign a deed back to the lender and hand them the keys to the house walking away without having to pay off your mortgage.

6. Sell Your Home. If you do have equity, you may want to sell your home and downscale to something that is more affordable or just rent for awhile until your financial situation improves. If you have lost your job or your hours have been cut, you are facing a divorce, illness or death in the family, selling your home may be the best option. Consult a Realtor and have them market your home and help you find the right buyer.

In today’s market, you must price your home at market or slightly under to sell it because there is so much competition from other distressed properties, such as short sales and bank owned foreclosures (REO’s).

7. Short Sale. A short sale is when you ask the lender to take a reduced amount on your mortgage and approve the sale at a lesser amount than you owe on the mortgage to a buyer who is willing to purchase the home. The shore sale process can take anywhere from 30 days to 60 days or longer. You will want to have a Realtor list your property and help you find the right buyer. However, an attorney, title company or short sale company should negotiate the short sale with your lender. The risk is that the bank will now approve the sale and your home could go to foreclosure if you do not make your mortgage payments while you are waiting for approval.

8. Loan Rescission. If you suspect that you are a victim of predatory loan practices, you may want to seek the advice of a foresensic loan specialist to review your loan. Most real estate foreclosure defense attorneys can perform this review for you and let you know if you have legal grounds to rescrind your loan. You have three years from the time you discover the predatory loan practices in which to file a legal action to rescind the loan.

9. Reinstatement. Any time during a foreclosure process, the homeowner can pay the defaulted amount including any fees and costs and the loan can be reinstated.

10. As a last resort you may need to file bankruptcy. Certain states protect primary residences and other personal assets from bankruptcy and you may be able to keep your home and your car and pension plan. However, you will need to consult with a bankruptcy attorney as the bankruptcy laws are complicated.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.