How to Prevent Foreclosures in Philadelphia

Foreclosure is a difficult legal process in which a mortgage lender takes a property after the borrower stops paying. Foreclosure happens for several reasons, a lot of times due to a loss of employment or expensive medical bills. The mortgage lender usually sends the homeowner a “notice of default” before filing documents for a foreclosure lawsuit. If the mortgage borrower does not take the steps to avoid foreclosure, the lender will sell the property at auction to get back lost funds. Foreclosure can damage the borrower’s credit score and make it difficult to get future loans.

Knowing and understanding the differences between being late on your mortgage payments and facing foreclosure is vital. Mortgage delinquency occurs when an individual hasn’t made at least one mortgage payment thirty days after the deadline. While being a little late on your mortgage can lead to foreclosure, it doesn’t always mean the individual will lose their house. During this phase, homeowners tend to receive late fees while having their credit affected. The foreclosure process usually occurs after the borrower has fallen 120 days behind on their mortgage payment. The final stage is the homeowner losing their house to mortgage foreclosure.

Homeowners face two main types of mortgage foreclosures: judicial and non-judicial.

  • “Judicial foreclosures” are the most common type of foreclosure in Pennsylvania and the rest of the United States. During this foreclosure, the lender filed a lawsuit against the borrower. The court then sets a hearing date to figure out whether the lender is entitled to foreclose on the property. If the court favors the lender, the lender will be issued a foreclosure property judgment. The lender can then sell the property at auction to satisfy the existing debt.
  • In “non-judicial foreclosures,” the lender does not need to file a lawsuit in court. Instead, the lender will file a notice of sale with the Philadelphia recorder’s office at City Hall. The notice of sale will include the date, time, and location of the foreclosure home sale. The lender can then sell the property at auction or use a real estate agent to satisfy the debt.

Other types of foreclosures in Philadelphia exist, such as deeds in lieu of foreclosure and short sale.

  • A deed in lieu of foreclosure is an agreement between the borrower and the mortgage lender. The borrower agrees to give the lender the property in exchange for the lender forgiving the debt. Most of the time, this is the most appropriate route for every individual involved.
  • A short sale is a property sale when the debt is satisfied for less than the amount owed on the mortgage. The lender must agree to a short sale, or this method does not matter.

Since we discussed mortgage foreclosure, explaining the other form of foreclosure is needed. Tax foreclosure is a legal process in which the city or state takes control of the property and sells it because the owner has failed to pay the annual property taxes. The process typically begins when the owner misses a tax payment, and the government sends a “notice of delinquency” to the individual. If the owner doesn’t pay the taxes within a specific time, the government will file a lawsuit to foreclose on the property. If the owner does not respond to the case, the government will win by default, and the property will be sold at auction.

Tax foreclosure in Philadelphia can really hurt homeowners, leading to the loss of their homes and their equity in the property. It is important to be aware of the tax deadlines and to pay your taxes on time to avoid this situation.

There are many reasons why homeowners face foreclosure in Philadelphia. Some of the most common causes include:

  • Loss of employment.
  • Expensive medical expenses.
  • The Homeowners get a divorce.
  • Natural disaster.
  • Unexpected financial difficulties.
  • Rising interest rates or mortgage payments that homeowners cannot afford.

If you are facing foreclosure, contacting your lender as soon as possible is essential to discuss your options. There may be programs or help available to avoid foreclosure.

There are a few things you can do to try to stop foreclosure in Philadelphia:

  1. Contact your mortgage lender and try to work out a reasonable payment plan. Many lenders are willing to work with borrowers struggling to pay each month.
  2. Apply for a loan modification. A loan modification is a change to the terms of your loan that can make it easier for you to afford your payments on time.
  3. Sell that home fast. If you can sell your property for more than you owe on your mortgage, you can use the money to pay off the loan and avoid foreclosure.
  4. Short sale. A short sale is when you sell your home for less than you owe on your mortgage. Your lender may agree to a short sale if it is better than foreclosure.
  5. Deed in lieu of foreclosure. A “deed in lieu of foreclosure” is when you return your home to your lender for debt forgiveness.

Other possible ways to avoid foreclosures:

A good way to prevent pre-foreclosure is responsible spending and handling the important things such as healthcare, food, and shelter. A good living environment comes before material objects; review your finances and see where to limit spending to ensure you can make monthly mortgage payments. Look for cost-efficient ways to enjoy life, take advantage of free leisure activities, and cut optional expenses like multiple t.v streaming devices and unnecessary other costs.

Another similar idea to prevent pre-foreclosure is to sell off assets to submit your mortgage payments; some individuals have items such as a second vehicle, jewelry, and other luxury items. Consider picking up an extra job to make financial ends meet; if your mortgage payment still exceeds what you can afford, consider downgrading to something more reasonable.

It is crucial to act quickly if you are facing foreclosure. The longer you wait to react, the more likely you will lose your home.

Does Philadelphia offer any government assistance for homeowners facing foreclosure?

Yes, Philadelphia does offer government assistance for Philly homeowners facing pre-foreclosure. The city provides a variety of programs to help homeowners who are struggling to make their mortgage payments. These programs can provide financial assistance, counseling, and other resources to help homeowners and families stay in their Philly homes.

Some of the government assistance programs available in Philadelphia include:

  • The Homeowners Emergency Mortgage Assistance Program (HEMAP) provides up to $35,000 in financial assistance to homeowners facing foreclosure.
  • The Homeowner’s Defense Fund (HDF) provides counseling and other resources to help homeowners prevent foreclosure.
  • The Philadelphia Mortgage Assistance Program (PMAP) provides financial assistance and counseling to homeowners facing foreclosure.

Sell a Home to an Investor before Foreclosure

  • If you’re facing foreclosure, selling a property directly to an investor can prevent the foreclosure from happening, losing your house, and damaging your credit. Most Investors can close within three weeks of starting the title search.
  • Investors purchase the property as-is without requests for home repairs or renovations.
  • The ordinary real estate investor will purchase a home, covering all closing costs and requiring no additional fees.
  • Simple real estate transaction; no obligation and all-cash offer!

Foreclosures are stressful obstacles that some homeowners may face; there’s no cause for panic because there are solutions to prevent and face foreclosures. The most important thing a homeowner can do is contact professionals to guide them through these challenging circumstances. A professional home investor can help you avoid foreclosure by purchasing the property. If you’re facing foreclosures in Philadelphia, contact us to see how we can assist you!

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