How to Stop Foreclosure in District of Columbia: 8 Effective Ways

Foreclosure in any aspect is a negative situation. No homeowner will ever want to foreclose their home because of any financial crisis. Facing foreclosure is an awful situation. There are two ways through which the foreclosure takes place: Judicial and Non-Judicial. Washington, DC allows a non-judicial foreclosure. The foreclosure process has to follow state law. There are ways to stop foreclosure, through which you can save your home.

If you are currently in foreclosure it’s important for you to know, how you can stop foreclosure from taking place. There are various options you can opt for to stop a foreclosure from happening.

What Does Foreclosure Mean?

Taking a loan from a bank or a lender to buy a house or property is very common everywhere. Paying back the borrowed amount in the given time duration is also very important. If someone fails to pay back the loan amount, the foreclosure situation is very likely to come into existence. Foreclosure begins after the very first missed payment.

Foreclosure can also happen if the homeowner fails to pay the property tax levied upon them. There are various reasons for falling behind in payments like, financial crisis, medical emergencies, and sudden loss of job.

Introduction to Foreclosure in Washington, DC

The foreclosure crisis peaked in 2010. The foreclosure process and mortgage services were heavily supported by state and federal laws after that. The non-judicial foreclosure may take some time but you may have better chances if you quickly act upon it. In Washington, DC, people must sign a promissory note and mortgage when they take a loan to buy property. These documents give people some contractual rights as well.

Washington, DC foreclosures most likely give you the right to many benefits. They are:

Receive notice in the form of a breach letter before foreclosure.
You can apply for loan mitigation.
If you are in the military, you will get special protection.
Get notified about the foreclosure and chance to respond legally.
Pay off your debt to prevent a foreclosure sale.
Get any excess money after a foreclosure sale.

Key Points About Washington, DC Foreclosure

Primary Security Instrument- Deed of Trust and Mortgage
Judicial Foreclosure- Yes
Non-Judicial Foreclosure- Yes
Right of Redemption- Varies
Timeline- Typically 120 Days
Deficiency Judgements Allowed- Varies

Ways to Stop Foreclosure in Washington, DC

There are ways of stopping home foreclosures in Washington, DC that you need to know. Let’s cover them all.

Declare Bankruptcy

Yes, bankruptcy is a way through which foreclosure can be stopped. But you need to understand the concept of chapter 7 and chapter 13 of bankruptcy.

Chapter 13 bankruptcy in Washington, DC: It is a common option to go for to stop foreclosure. According to chapter 13 bankruptcy, you are given a payment plan of 3 or 5 years to catch up with the payment in arrears. The lenders will be given orders to stop going forward with the foreclosure process. They will have to give you time to get back to your payment arrangements.

Chapter 7 bankruptcy in Washington, DC: It is a liquidation form of bankruptcy. Unless you want the Washington, DC bankruptcy trustee to sell your house, it may be a less common option to pursue. Even though it is the lower-cost bankruptcy option, you still may not want to opt this option.

You need to understand what your payment plan is. Is your payment plan regarding chapter 13 bankruptcy worth pursuing? For instance: you have $150,000 in arrears on your house and your payment plan is for 5 years / 60 months. Will you be able to pay an additional $2,500 every month to cover your arrears?

Applying for Loan Modification

It has become difficult to fully pay off the mortgage payments. There are many reasons why you can miss out on payments or get late in paying the mortgage. Before this unwanted thing happens, you may go to your lender and find out if they consider a loan modification option.

Reinstating Your Loan

Do you have enough cash to pay off all the loan amount? Approach your lender with cash. See if they accept the payment and permit you to continue paying your loan amount without any legal interference. Lenders only want to recover the loan amount and so they will accept your offer.

» Direct Mortgage Lenders in Washington, DC: Click to know about the best mortgage lenders in Washington, DC.

Plan for Repayment

Great! You can make payments again after missing out on some payments. Find out what your lender thinks regarding your repayment plan. In the repayment plan, you are allowed to pay the missed payments slowly along with the current mortgage payments. You can come up with an agreement on the repayment plan to stop foreclosure. According to this, you agree to pay your missed payments along with the normal payments.

Refinancing

Refinancing may be a difficult option to consider. Interest rates are going up only making it difficult to think of loans. You can start with a new lender which means a whole new agreement. There may be one drawback. It might become difficult to qualify for refinancing if your credit score is negatively affected.

Sell Out Your Home

It’s really sad even to think of selling your house. But it is actually a good option to consider selling your home to avoid foreclosure. You may receive an amount more than the actual price of your home. Perhaps you could even buy a house worth more than the one you sold. You can stop something drastic from happening and your credit report will also not get spoilt.

» How to Sell a House in Washington, DC: Read the blog to know about how you can sell a house in Washington, DC.

Short Sale

A short sale means that you can sell your home for an amount which is less than the amount you owe. The reason behind this is that sometimes your home is sold for a lesser amount in the auction. The bank/lender is sometimes not able to recover the whole amount they are hoping for. Home staging companies in Washington, DC can help you get more than the asking price.

Deed In Lieu of Foreclosure

A deed in lieu of foreclosure takes place when the homeowner transfers the property to the lender. The homeowner hand over the property to the lender, clearing all the debts they owe. The property is then owned by the lender. You have to vacate the property as soon as possible. This way you can easily save yourself from any damage.

Frequently Asked Questions

Is there a moratorium on foreclosures in DC?

The District of Columbia Department of Insurance, Securities and Banking (DISB) wants residents to be aware that the District's foreclosure moratorium on residential mortgages expires on June 30, 2022.

How long does foreclosure take in DC?

45-60 Days
Technically, a property in Washington D.C. could be foreclosed in about 30 days. However, the typical period for foreclosure is usually closer to 45-60 days.

How does foreclosure work in DC?

In DC, the lender must provide details about a foreclosure mediation program. The borrower will then have a chance to participate in mediation and find an alternative solution to foreclosure. If the mediation process fails, the lender can then proceed with the foreclosure sale.

How would a DC condo owner avoid foreclosure by curing a payment default?

Right to Cure.
A condo owner has the right to cure a default in assessment payments at any time before the foreclosure sale by making full payment of past due assessments, plus any late charge, interest due, and reasonable attorneys' fees and costs incurred in connection with the enforcement of the lien.

How to Sell Your Own Home in Washington, DC: Read to know how you can sell your home in Washington, DC.
Washington, DC Cash Offer: Read the blog to know about the Washington, DC cash offers in houses and it’s importance.
Who Pays for Title Insurance in Washington, DC: Find out who pays title insurance in Washington, DC.
How Long Does a Preapproval for a Mortgage Last: Know about all the details of the Preapproval of Mortgage loan.

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