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When you can no longer pay for your property

As much as we try to avoid it, sometimes unfortunate event come in our life and we are unable to continue with certain obligations like continuing payment for our purchased properties.  Should such an undesirable circumstance occur, we should deal with it as systematically and in the most informed way that we can. Here are some tips:

Don’t ignore your problems

The natural tendency of a lot of people is to deny that the problem exists or to postpone dealing with it in the future. We do this because we want to avoid confronting our negative feelings.  By all dictates of logic, this approach will only worsen the situation. The earlier we deal with the problem, the better the chances of finding solutions to it. Accept that the problem exists, then focus on finding a solution.

Keep communicating with the lender

Lending institutions are more lenient to borrowers who show openness and effort in working on their problems. You have to communicate to the lender that you are indeed doing something about your situation in order to win them to your side. Build a good relationship with the person in charge of your loan instead of an antagonistic one. This can really go a long way in terms of getting much needed leniency.

Prioritize your spending

When times are tough, you will have to prioritize which things would be worth spending on. In that case, you won’t feel a total loss if indeed you will have to let go of some luxuries. You might just be surprised at how prioritizing your spending might mitigate your problem.

Know your mortgage rights

It is important to know your rights as a mortgagee, such as, grace periods as prescribed by law, required legal procedures for foreclosure of properties, and the like. For example, written notices are necessary before a developer can repossess your property. 

Most especially if the subdivision you bought your property from does not have the proper permits, say from HLURB or the Housing Land Use and Regulatory Board, repossession or foreclosure of a property is out of the question. You may in fact ask for a refund (less some of allowable expenses of the developer, e.g., broker fees) of your payment if they don’t have the required permits.

You can also examine your contract with the developer or the lender to see if there are provisions that you can use to your advantage.

Restructure your loan

Ask the lending institution to restructure your loan to ensure that you will be able to continue your payment.  Institutions generally prefer to restructure a loan rather than go through a long legal process of foreclosing a property. That is why maintaining communication is very important.

Refinance your loan

You can also explore other lending institutions other than that which currently gave you the loan. There maybe others who are willing to pay the unpaid balance and offer you better terms. Be wary though. Many scams abound in these schemes, especially because those who look for refinancing alternatives are usually emotionally vulnerable.

Sell your property before it gets foreclosed

A very good option is to sell your property before it gets foreclosed. That is why it is important to recognize your problem early on and know when it is wiser to let go of a prized property. The earlier you decide, the less desperate your sale. There would still be a chance you can profit from the transaction instead of having to sell lower than the market price.

When all else fails

When all else fails, you will have to allow your property to be foreclosed by the bank or repossessed by the developer.  Again, know your rights.  The Maceda Law or RA 6552 would be one such law you should be familiar with. This law aims to protect installment buyers of properties. One last piece of advice, ask as many experts as you can regarding your options.

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