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Thursday, October 28, 2010
Here’s a fact that may surprise you – lenders hate foreclosures almost as much as you do! After all, they’re losing money and have to follow a complicated legal process to take the property back. This tells you, if you’re facing the possibility of foreclosure, that it’s in your best interest to work with your lender.
So, if you’re having trouble keeping up with your mortgage payment, contact your lender immediately and inform them of the situation. Also, you can contact a HUD-approved Housing Counseling Agency or call them Toll FREE (800) 569-4287 or TTY (800) 877-8339
Now, if you’re unable to make your mortgage payment, I recommend you follow the guidelines below. They’re straight from HUD with some additions on my part.
Guideline 1: Definitely Don't Ignore the Situation!
With foreclosure, there’s a natural tendency to hope the whole situation will just go away if we ignore it. This is not a wise choice because the farther behind on the payments you fall, the more difficult it’ll be to re-instate your loan and the more likely it’ll become that you’ll lose your home. So, take the foreclosure “bull” by the horns and deal with the situation right away.
Guideline 2: Contact Your Lender Immediately!
As I said earlier, lenders hate foreclosure nearly as much as you do. So, most have options to help you through tough financial times. It depends on the lender, but such options may include:
• modifying the mortgage length or interest rate.
• waiving fees or penalties.
• deferring payments through temporary forbearance.
• increasing monthly payments to cover past due amounts.
• modifying an adjustable-rate mortgage to a fixed rate, etc.
Guideline 3: Open and Respond to All Lender Mail Right Away!
Normally, the first notices you receive from a lender will give you one or more of the options listed under Guideline 2. So, definitely open that mail immediately because those options can help you through a rough time. If you don’t open the mail or toss it out, you’re only making matters worse because they may include notices of pending legal action. And, believe me, foreclosure courts don’t accept any excuses regarding failure to open mail!
Guideline 4: Know Your Mortgage Rights!
Always learn the specifics of your loan documents so you know what your rights and those of the lender are under the terms of the contract if you can’t make the payments. If you don’t understand the contract provisions, talk to a counselor or a real estate attorney. Also, remember that foreclosure laws and time frames vary by state. This means you need to contact the appropriate state office to learn what’s involved in the foreclosure process.
Guideline 5: Understand Foreclosure Prevention Options!
HUD has free and valuable information on options for preventing foreclosure (also called loss mitigation). These options can be found on the internet at http://portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL.
Guideline 6: Contact a HUD-approved Housing Counselor!
HUD funds free or very low cost housing counseling nationwide. The counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.
Guideline 7: Evaluate Your Spending and Budget. Budget, Budget!
After healthcare, your first priority should be keeping your house. So, that means you need to look at where your spending goes and “cut out the fat.” By that, I mean zero in on “optional” expenses – cable TV, memberships, daily trips to the coffee shop, eating out, etc. If you’re not careful, these expenses can tear the heart of your budget, and they’re easily avoided! All the money saved by foregoing these items can go to making your mortgage payment. Also, delay payments on credit cards and other "unsecured" debt until you’ve have paid the mortgage.
Guideline 8: Employ Your Assets!
You may well have assets that you can sell for cash and apply to your mortgage payments. These could include items like a second car, jewelry, a whole life insurance policy, etc. Also, if anyone in your household can get an extra job, it’ll bring in additional income. Even if that income isn’t great, the effort demonstrates to the lender that you’re willing to make sacrifices to keep your home
Guideline 9: Avoid Foreclosure Prevention Companies!
I repeat – avoid these companies! Some are legitimate; some are scam artists. In either case, you don’t need to pay them hefty fees for foreclosure prevention! Sometimes those fees can amount to two-to-three months’ worth of mortgage payments! Why do this when, for free, you can work with a counselor or with the lender?
Guideline 10: Don't Lose Your Home to Foreclosure Recovery Scams!
You may be contacted by firms claiming that they can stop your foreclosure right away if you sign a document appointing them to act on your behalf. If that’s the case, tell them to get lost! This is a scam where you end up signing over the title to your property and becoming a renter in your own home!
Never, ever sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD-approved housing counselor! Want to talk more about options for preventing foreclosure? Contact us right now at and we can provide you with that information!