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Taking Steps To Avoid Foreclosure
The rate of foreclosures in the United
States increased by 80% from 2006 to 2007 and at least 2 million
homeowners may be facing foreclosure in 2008.
If you’re facing foreclosure—or just worried
about the possibility—there are steps you can take to avoid going down
that road:
Don’t bury your head in the sand.
Many homeowners who have missed a mortgage payment or two tend to ignore
the phone calls and letters from their lender. Don’t do this.
Foreclosure proceedings can happen within 30-60 days so ignoring the
problem will only make it worse. Also, it’s a very good idea to be
knowledgeable about your situation. Sitting down and analyzing your
finances is an excellent place to start. Also, make sure you know the
details of your loan, delinquency amount, and missed payment penalties.
The more you know the better.
Contact your lender immediately. If
you don’t get in touch with your mortgage professional, you’re severely
handicapping your ability to save your home from foreclosure. Your best
bet is to call them and be upfront and honest about your situation. Let
them know exactly what is going on. You may be embarrassed to tell
someone that you’re having financial difficulties, but contacting your
lender is a must. Keep in mind that lenders lose money on foreclosures
so they will try to work with you.
Know your options. In most cases,
you’ll have a few options to avoid foreclosure proceedings. The most
common options are the following: 1) forbearance: an agreement with your
lender to pay less or nothing on your mortgage until your financial
problems are solved, 2) reinstatement: paying back the amount that’s
overdue in one lump sum by a specified date, 3) repayment: combining the
amount you’re behind on with current payments for a set period of time,
and 4) loan modification: an agreement with your lender to change the
terms of your loan going forward. The availability of these options
depends on several different things including your delinquent amount,
how long you’ve been delinquent, your lender’s policies, and the type of
loan you have.
Talk to a housing counselor. Not only
should you talk to your lender, but you should also talk to a certified
housing counselor. Several agencies offer free or relatively low cost
counseling on areas such as your range of options and organizing your
finances. They can also represent you in negotiations with your lender
if needed. Two excellent general counseling services are the Department
of Housing and Urban Development (800-569-4287) and the Homeownership
Preservation Foundation (888-995-HOPE). If you have an FHA loan, the FHA
offers housing counseling as well (800-CALL-FHA). ∆ |
