Stopping Foreclosure - How to Use Information to Negotiate with the Bank

An intelligent home owner can use a slightly obscure fact to their advantage to try to stop foreclosure by their mortgage company. Did you know that it is less expensive for banks to keep you in your home than actually take a property to foreclosure?

On average, it costs the mortgage company between $60,000 and $80,000 to foreclose on a house. In the long run, it would be less expensive for them to work with the borrower to find a solution to the problem than evict them from their residence. Often, the borrower has to be the one to point this out to the mortgage company. It can be a very useful negotiating tactic.

Why does it cost so much to foreclose? To begin with, there are the expenses of going through the legal process of eviction. The banks have to hire local attorneys that specialize in evicting people. Then, there are costs associated with filing the paperwork and eviction proceedings.

If the home owners fight the lawsuit, then the bank's legal fees begin to climb faster and faster. Once a foreclosure or eviction case is final, then the mortgage company has to pay the costs of evicting foreclosure victims if they refuse to leave the dwelling voluntarily. A lender with any intelligence would want to work with a home owner to stop eviction.

After securing the residence from the foreclosed home owner, the bank is then forced to deal with the aftermath. Often, if a home owner doesn't have the funds to keep up their mortgage payments, they also did not have the money to maintain the home. And a number of foreclosure victims, in frustration over what was going on, do damage to the property before they are forced to leave. All of this now falls on the mortgage company to clean up.

Whether the residence was damaged due to vandalism or revenge, the mortgage company will usually not do anything about it. This causes the value of the property to decline and the longer it is left abandoned, the further the value falls. In the end, the mortgage company will be offered far less for the property than what they would have if they had negotiated with the borrowers to stop foreclosure before it began.

Even if the bank does not do anything to repair the residence, they still have to deal with the other expenses in owning that property. Any property taxes that are due on the parcel have to be paid by the lender. And, some level of home owner's insurance will need to be purchased for the residence to protect the lender from accidents to the property. And, when they try to unload the property, the mortgage lender will need to use local real estate brokers.

That means they will be paying commission fees to the agent when the property is finally sold. It just makes little economic sense for a bank to incur those expenses when it would be more effective for them to work with the current home owners. This is just one piece of information that can help you to save your house from foreclosure.