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The home is in foreclosure. What can we do?

When your marital home has a mortgage that is not being paid, your mortgage lender will begin providing notice that your loan has fallen into default. And, if the default is not cured, the loan can be accelerated — that is, the entire balance due under the note and mortgage is demanded.

When you find yourself in this situation, you should act very quickly. As a first step, you should gather some information by considering the actual value of the home and the total amount owed to reinstate and to payoff the mortgage (these sums are different than your principal balance owed). Then, this information will help you decide whether you want to focus on “retention” or “liquidation.” Retention options focus on paying the loan current and keeping the home. Liquidation options focus on selling the home and paying off the debt.

Your next step is to contact your mortgage lender to discuss y the options available to prevent a foreclosure. Sometimes, mortgage lenders offer no options other than a full reinstatement to bring the loan current or a full payoff of the entire debt. However, some lenders are willing to explore options that would allow you to cure the default. These options can include, but are not limited to: forbearance plans, repayment agreements, and loan modifications.

In some cases, liquidation of the home is the only option. If you have a desirable home with more equity than debt, you can probably sell the home and payoff the loan. If that cannot happen, though, your mortgage lender might be willing to work with you on liquidation options. These options can include, but are not limited to:  a deed in lieu of foreclosure, a short sale, or a consent to judgment with a deficiency waiver (or, forgiveness of the debt owed in exchanging for allowing the home’s foreclosure).

Facing foreclosure during a divorce can be very challenging. It is important to work quickly with your lender to explore viable options. And, if you are uncomfortable, find counsel with experience in both divorce law and foreclosure law.