Sean Miller remembers when he first received the letter in the mail telling him that he was in arrears and the bank planned to initiate foreclosure proceedings on him. There were a good many confusing words in the document, but he understood right away that he would not have to worry any longer about making those monthly mortgage payments. It was all or nothing with the bank.
Sean had some options, but he knew he had to act swiftly if he had any hope of keeping his house and preventing the sale or at least, his dignity.
The first thing he did was call the bank and talk to a representative. He negotiated an absolute minimum he could pay to stop the foreclosure proceedings. Unfortunately, he couldn't afford that amount.
Since he was not able to work out an amount, he tried refinancing. He found out quickly that refinancing was only an option if he had plenty of equity. He didn't have enough equity in the home to get refinancing since he also was unable to show that he could make future payments.
Sean was not able to refinance so he sought out someone who would buy a share of his equity. Sean attempted to work out a deal with his Uncle Ken, who had plenty of money and no children. Uncle Ken agreed to purchase a share of Sean's equity. The agreement stands that when Sean sells the house, Uncle Ken (or his heirs, Sean's cousins) gets the agreed upon percentage of his equity. It isn't a great deal for Sean, but in Sean's eyes it was far better than foreclosure.
Another option for someone who might fall into the same circumstances as Sean Miller is to sell. If there is equity in the house, it might be mutually beneficial to find real estate investors who "flip houses." People facing foreclosure should shop around for the best offer from real estate investors. People with very little equity should talk to the bank about something called a short sale. A short sale is when a house is sold for less than is owed to the bank on it. Again, this isn't the best solution, but it still beats foreclosure.
Sean Miller was lucky. He had a family member to help him out of his dilemma. People facing financial crises are well-served by swallowing their pride and seeking help.
Even with the help of a short term personal loan from a family member, a person facing foreclosure could catch up on the default loan and then put the house on the market where it can be sold for its full value. In that case, everyone gets paid back for their investments.
Note that Sean's solution may not be appropriate for you. Always first consult with your financial advisor before making any decisions concerning your own financial future.
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