Avoid Foreclosure &
Save Your Home

Stuff Happens!

Job loss, unforeseen medical conditions, and other life-altering occurrences can happen to anyone, causing us to fall behind in our loan payments. If we neglect paying our credit cards it hurts our credit rating; but if we stop paying our home loan, the situation is even worse, because the lender can foreclose and take ownership of the home.

Get Over Feeling Embarrassed

You must put your pride on hold if you're serious about stopping the foreclosure process and keeping your home.

Really!!! Lenders do not want to foreclose, and will usually work with you to get you back on track. Your lender does not want to foreclose on your home!  It is a very expensive proposition for a lender to do this and they hope to avoid it.  Mortgage Servicers do not want to own your home!  Work with them!

Be Proactive: Call your Mortgage Servicer (the lender that is collecting your payments) immediately!

Your mortgage was given to you under very specific terms and secured by a mortgage, or Deed of Trust, on your home.  Although it may seem cruel, these documents will dictate the actions of your mortgage servicer.  If they don't follow the terms in these documents, to the letter, then investors will not invest in mortgage loans and that is bad for everyone.

Although lenders do not want to foreclose if it can be avoided, they do want to make sure you can follow-through on any promises you make to bring your account current.

Tell it like it is!! Be prepared to share all details about your financial situation with your lender.

• An explanation of your current financial circumstances.

• Details about your current income.

• A list of your household expenses.

The lender will review and analyze your situation before offering a solution to bring your loan up-to-date.

Does the plan correct your situation?

Know your situation. How long is it going to take you to correct your financial situation? If your situation can be corrected in a few months, then this is clearly workable with your lender.  On the other hand, if your situation is going to take more than three or four months to correct, you will need to seek more drastic action instead of hoping the lender will work with you.  Lenders hands are tied by the contract you signed at your closing. 

If your financial "bump in the road" is a three month situation then where can you dig up three months of mortgage payments?         Family?    401(k) loan?   IRA?

Consider borrowing money against a free and clear car? Some lenders will lend you $10,000 on just a signature.  If you throw in the collateral of a car they will be more eager to help.  Your possible damaged credit scores may prevent this.  But if you act soon enough you can also protect your credit score as well.

FACT:  Most people get into trouble because we "hope" our financial storm will go away and simply end. Not happening!  Instead, we must get objective help! 

Talk to the mortgage broker, realtor or loan officer who helped you get the loan in the first place and seek their help. 

If you don't have a trusting relationship with this person, seek a HUD Approved Counseling Agency by visiting www.HUD.gov.

Solutions for Temporary Problems

Reinstatement
Reinstatement might be possible when you are behind in your payments but can promise a lump sum to bring payments current by a specific date.

Forbearance
In forbearance, you are allowed to delay payments for a short period, with the understanding that another option will be used afterwards to bring the account current. Lenders sometimes combine Forbearance with Reinstatement if you know you'll have the funds to bring your account current by a specific date.

A Repayment Plan
If your account is past due, but you can now make payments, the lender might agree to let you catch up by adding a portion of the past due amount to a certain number of monthly payments until your account is current.

Solutions for Longer-Term Problems

Mortgage Modification
If you can make your regular payment now, but cannot catch-up the past due amount, the lender might agree to modify your mortgage. One solution is to add the past due amount into your existing loan, financing it over a long term.

Modification might also be possible if you no longer have the ability to make payments at the former level. The lender can modify your mortgage to extend the length of your loan (or take other steps to reduce your payments).

Selling Your Home
If catching up is not a possibility, the lender might agree to put foreclosure on hold to give you some time to attempt to sell your home.

Deed in Lieu of Foreclosure
With this option, the lender allows you to give-back your property--and forgives the debt. It does have a negative impact on your credit record, but not as much as a foreclosure. The lender might require that you attempt to sell the house for a specific time period before agreeing to this option, and it might not be possible if there are other liens against the home.

 For FHA Loans
The lender might be able to help you receive a one-time payment from the FHA Insurance fund. Your loan must be at least 4 months but no more than 12 months past due and you must show you are able to begin making full mortgage payments.

• You must sign a promissory note, which allows HUD to place a lien on your property for the amount received from the fund.

• The note is interest free, but must eventually be repaid.

• The note becomes due when you pay off the loan or when you sell the property.

For VA Loans
VA Regional Loan Centers offer financial counseling that's designed to help you avoid foreclosure. Call 1-800-827-1000 and ask for the phone number of the Loan Service Representative in your area.

Contact a HUD-Approved Counselor
If you don't want to talk with your lender first, contact a HUD-approved counseling agency. A counselor can help you determine which options might be available to you and negotiate with your lender to work out a repayment program. You can find an approved agency at www.HUD.gov

Get Your Credit Right
If your home loan is past due, your other obligations probably are too. A nonprofit credit counseling agency might be able to help you work with your creditors to reduce your monthly payments by lowering interest rates or extending repayment periods.

 The key word here is nonprofit. Steer clear of companies that promise you quick, easy results for all of your credit problems--if you pay them a large fee. You know better--that's not how it works in the real world. The National Foundation for Credit Counseling (www.nfcc.org) is a good place to start.

Get everything that you agree to with your lender in writing and then follow it to the letter!

Remember most people get into the "financial trouble" because they do not act soon enough.  Please move your ego aside and seek help early in the transition. 

If you get behind, lenders are going to call.  Answer their call and work with them.  


Yours in Home Ownership,


Lori and Lynn

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