How To Avoid Foreclosure
Foreclosure. It's a word that's sending shivers of fear down the
back for many a household in the current financial crisis.
If
you see you maybe heading for trouble, you can take steps NOW to
prevent foreclosure on your home. As with anything of this
magnitude, you need to act quickly. Don't wait until it's too late
to turn things around.
You may be facing:
- The loss of a job
- Cuts in hours or overtime pay
- Retirement
- Illness, injury, or the death of a family member
- Divorce or separation
If your family is facing any of these changes and cannot pay your
bills, now is the time to look closely at what you owe and what you
earn, eliminating unnecessary spending and reaching out for help if
you still can't meet your financial obligations. Taking action now
can help you protect your family from the loss of your home.
On the next page are some steps you need to take now, to safeguard
your home for the future, and put the threat of foreclosure behind
you.
Remember. The time to act is now. The longer you wait, the deeper
the problem becomes.
1. CONTACT YOUR MORTGAGE COMPANY NOW
Many people avoid calling their lenders when they have money
troubles. Most of us are embarrassed to discuss our money problems
with others or believe that if lenders know we are in trouble, they
will rush to collection or foreclosure.
Lenders want to help borrowers keep their homes. Foreclosure is
expensive for lenders, mortgage insurers and investors. HUD/FHA, as
well as private mortgage insurance companies and investors like
Freddie Mac and Fannie Mae, require lenders to work aggressively
with borrowers who are facing money problems.
Lenders have workout options to help you keep your home. However,
these options work best when your loan is only one or two payments
behind. The farther behind you are on your payments, the fewer
options are available.
Do not assume that your problems will quickly correct themselves.
Don't lose valuable time by being overly optimistic. Contact your
mortgage lender to discuss your circumstances as soon as you realize
that you are unable to make your payments. While there is no
guarantee that any particular relief will be given, most lenders are
willing to explore every possible option.
To help you, lenders typically need:
- Your loan account number
- A brief explanation of your circumstances
- Recent income documents (such as Pay stubs; Benefit Statements
from Social Security, Disability, Unemployment, Retirement, or
Public Assistance. If you are Self-employed, have your tax returns
or a Year-to-date Profit and Loss Statement available for reference)
- List of household expenses
Expect to have more than one phone conversation with your lender.
Typically, your lender will mail you a "loan workout" package. This
package contains information, forms and instructions. If you want to
be considered for assistance, you must complete the forms and return
them to your lender quickly. The completed package will be reviewed
before the lender talks about a solution with you.
CALL TODAY! The sooner you call; the sooner help is available.
2. DO NOT IGNORE MAIL FROM YOUR LENDER
If you do not contact your lender, your lender will try to contact
you by mail and phone soon after you stop making payments. It is
very important that you respond to the mail and the phone calls
offering help. If your lender does not hear from you they will be
required to start legal action leading to foreclosure. This will
substantially increase the cost of bringing your loan current.
3. TALK TO A HOUSING COUNSELING AGENCY
If you don't feel comfortable talking with your lender, you should
immediately contact a HUD-approved housing counseling agency and
arrange an appointment with a counselor. A counselor will help you
assess your financial situation, determine what options are
available to you, and help you negotiate with your lender. A
counselor will be familiar with the various workout arrangements
that lenders will consider and will know what course of action makes
the most sense for you and your family, based on your circumstances.
In addition, the counselor can call the lender with you or on your
behalf to discuss a workout plan. By meeting with a counselor before
your mortgage payments are too far behind, you can protect yourself
from future credit problems.
A good counselor will help you establish a monthly budget plan to
ensure that you can meet all of your monthly expenses, including
your mortgage payment. Your personal financial plan will clearly
show how much money you have available to make the mortgage payment.
This analysis will help you and your lender determine whether a
reduced or delayed payment schedule could help you. Also, a
counselor will have information on services, resources, and programs
available in your local area that may provide you with additional
financial, legal, medical or other assistance that you may need.
To find out more about HUD-approved housing counseling agencies and
their services, please call (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. ET (6:00 a.m. to 2:00 p.m. PT). You can also
get an automated referral to the three housing counseling agencies
located closest to you by calling (800) 569-4287.
Such agencies provide free, or very low-cost assistance.
4. PRIORITIZE YOUR DEBTS
For the unemployed, getting by will require a new, tightened budget.
Prioritize your bills and pay those most necessary for your family:
food, utilities and shelter.
Failing to pay any of your debts can seriously affect your credit
rating. However, if you stop making your mortgage payments you could
lose your house. Whenever possible, any income available after
paying for food and utilities should be used to pay your monthly
mortgage payments. If your employment income has been stopped or
reduced, first consider eliminating or reducing your other expenses
(such as dining out, entertainment, cable, or even telephone
services). If that does not provide enough income, consider using
other financial resources like stocks, savings accounts, or personal
property that may have value like a boat or a second car. Take any
responsible action that will save cash.
In addition to speaking with your lender, you may want to contact a
nonprofit consumer credit counseling agency that specializes in
providing help in restructuring credit payments. Credit counselors
can often reduce your monthly bills by negotiating reduced payments
or long-term payment plans with your creditors. The majority of
credit counseling agencies are reputable and provide their services
free of charge or for a small monthly administrative fee tied to a
repayment plan. Beware of credit counseling agencies that offer
counseling for a large upfront fee or donation.
When you call a consumer credit counseling agency, you will be asked
to provide current information about your income and expenses. Make
sure you ask if the agency has a charge before you sign any
documents!
5. PRESERVE YOUR GOOD CREDIT
First and foremost, if you can keep your mortgage current, do so.
However, if you find that you are unable to make your mortgage
payments, you may qualify for a loan workout option. Check with your
lender to find out which of these options may be available.
6. IF YOUR PROBLEM IS TEMPORARY, CALL YOUR LENDER
- Reinstatement: Your lender is always willing to discuss
accepting the total amount owed to them in a lump sum by a specific
date. They will often combine this option with a Forbearance.
- Forbearance: Your lender may allow you to reduce or suspend
payments for a short period of time after which another option must
be agreed upon to bring your loan current. A forbearance option is
often combined with a Reinstatement when you know you will have
enough money to bring the account current at a specific time in the
future. The money might come from a hiring bonus, investment,
insurance settlement, or a tax refund.
- Repayment Plan: You may be able to get an agreement to resume
making your regular monthly payments, in addition to a portion of
the past due payments each month until you are caught up.
If it appears that your situation is long-term or will permanently
affect your ability to bring your account current:
Mortgage Modification: If you can make the payments on your loan,
but you do not have enough money to bring your account current or
you cannot afford the total amount of your current payment, your
lender may be able to change one or more terms of your original loan
to make the payments more affordable. Your loan could be permanently
changed in one or more of the following ways:
- Adding the missed payments to the existing loan balance.
- Changing the interest rate, including making an adjustable rate
into a fixed rate.
- Extending the number of years you have to repay.
6. IF KEEPING YOUR HOME IS NOT AN OPTION CALL YOUR LENDER
- Sale: If you can no longer afford your home, your lender will
usually agree to give you a specific amount of time to find a
purchaser and pay off the total amount owed. You will be expected to
obtain the services of a real estate professional who can
aggressively market the property.
- Pre-Foreclosure Sale or Short Payoff: If the property's sales
value is not enough to pay the loan in full, your lender may be able
to accept less than the full amount owed. This option can also
include a period of time to allow your real estate agent to market
the property and find a qualified buyer. Monetary help may also be
available to pay other lien holders and/or help toward paying a few
moving costs.
- Assumption: A qualified buyer may be allowed to assume your
mortgage, even if your original loan documents state that it is
non-assumable.
- Deed-in-lieu: Your lender may agree to allow you to voluntarily
"give back" your property and forgive the debt. Although this option
sounds like the easiest way out for you, generally, you must attempt
to sell the home for its fair market value for at least 90 days
before the lender will consider this option. Also, this option may
not be available if you have other liens such as judgments of other
creditors, second mortgages, and IRS or State Tax liens.
Avoid predatory lenders, and/or lending scams. Deal only with banks
or institutions you are familiar with.
Many mortgage lenders will bend over backwards to assist you so that
you can work things out, and you won't lose your home.
Believe it or not, lenders DO NOT want your home!
Foreclosure is very expensive and time consuming for your bank or
mortgage company.
By moving now, seeking help, and working with your lender, you can
save yourself a lot of trouble, embarrassment and heartache.
On the following page is a list of lenders that will work with you.
If you're lender is on the list, CONTACT THEM AT ONCE!
"Help for Homeowners" Lenders
The federal government and the mortgage industry have partnered to
assist those homeowners who have been negatively impacted by recent
changes in the economy, or are concerned about the future. The
mortgage lenders listed below are voluntarily participating in this
special effort. If your lender is listed here, you can help protect
your home by contacting them immediately!
LENDER Phone #1 Phone #2
Bank of America (800) 846-2222 (716) 635-2264
Chase Home Finance (800) 848-9136
Citimortgage (800) 92608783
Countrywide (800) 763-1255 (800) 669-4576
HSBC Mortgage Corp. (800) 338-6441 (888) 648-2134
Irwin Mortgage Corp. (888) 444-6446
James B Nutter & Company (800) 315-7334
Midland Mortgage (800) 552-3000 (800) 654-4566
Mortgage Service (800) 449-8767
National City Mortgage (800) 367-9305
Nationwide Advantage Corp. (800) 356-3442 Ext. 6002
Principal Residential Mort. Inc. (800) 367-6448 (800) 962-4450
Sun
Trust Mortgage (800) 443-1032 Option #2
Wells Fargo Mortgage (800) 766-0987
Wendover Financial Services
(888) 934-1081 (800) 436-1022
Washington Mutual Home Loans, Inc.
(866) 926-8937 (800) 254-3677
I hope you've found some useful information within this report that
will aid you in the prevention of possible foreclosure.
Remember, the more you put it off, the less likely you are to be
able to resolve the issue.
DO NOT LET PRIDE CAUSE YOU TO LOSE YOUR HOME! There IS help. All you
have to do is act. |
