Your Options When Facing Foreclosure
Current housing market conditions have changed radically; and, threaten to disrupt the lives of many honest, hardworking people. If you are having difficulty with your mortgage, start by reading carefully here.
What you're not reading in the papers is the real depth of the problem. While the press hoopla surrounding them might imply otherwise, it's not just Casey Serin and a handful of others. So remember: you are not alone.
Below we explain what your options are if you are having difficulty keeping mortgage payments current.
Beware of any so-called "foreclosure consultant" who offers immediately to take possession of your property and/or sell it. Make sure you do your homework and get free advice before making a decision.
But the most important thing for you to remember is that you must act soon. You must attempt to remedy your situation before it becomes overwhelming. While owning a home is part of the American dream, even households with great credit are sometimes threatened with bad breaks, hard times and the potential for foreclosure. Tragically, many foreclosures could be avoided.
Do not be lulled into complacency by individuals who will take advantage of you and make various promises to save your home, when their only interest is taking your home or capturing your equity (the so-called "foreclosure consultants"). While it's true selling your home may ultimately be the best solution, the first priority of anyone you consult should be to keep you in your home. If that is not possible, you will want to have a specialist work with the lender to save your credit – to give you an opportunity to start fresh.
Lenders don't want to be involved with foreclosures. Why? They lose money.
Our general advice follows.
I: Don't panic. Most households have more assets than they realize that can be used to make payments, delaying foreclosure. Unemployment insurance, disability insurance and savings are potential cash sources. Household budgets can be cut. Expensive cars can sometimes be sold for cash. In short, you may be able to change your lifestyle to save your home. Remember – in a crunch – family, friends, co-workers, religious congregations and community groups may be the solution to your immediate problem.
For further advice regarding your situation call the Homeownership Preservation Foundation, for homeowners in default. If you are in default or in danger of default, call 888-995-HOPE to get advice about how to avoid foreclosure. Please be aware that "foreclosure consultants" definitely will not give you this advice.
II. Immediately deal with late and missed payments. If problems cannot be delayed or deferred and if mortgage payments will be late or unpaid, then you must contact the lender as soon as possible. Your first line of defense – go on the offense. This proves to your lender that the situation may be resolvable.
Call your lender’s loss mitigation department. Be sure you to have your loan number handy as well as the latest statement with your mortgage balance and other information. Your objective will be to create a workout agreement (see below) modifying your mortgage, stopping lender foreclosure activity. This action is the first step in maintaining your credit. Don’t skip it. Yet, be aware that you may not be able to actually talk to anyone at the lender or at the lender's debt servicing company. This is one of the dirty secrets in the industry: doing the right thing won’t always be possible due to the situation created by Wall Street firms that have turned home loans into "Mortgage Backed Securities" (MBS)—bonds, which are sold on a secondary market. It is quite possible nobody really knows who actually owns your loan, which adds complexity. Seek help from us or another trusted source if you run into this brick wall.
III. Sell the property. In some situations there is no workout or refinancing option which can save a property. If a job is lost, medical payments are overwhelming or mortgage payments are rising past affordability, the only plausible choice may be to sell the property.
If your situation is headed downhill and getting worse every month, you must protect your long-term interests and sell the property. It's much much better for you to sell than for the bank to take it back in foreclosure. You may get a better price, more importantly, it may be possible to preserve your credit standing. This is very very important. While it may not seem like it right now, the sun will continue to rise –you will have another day – another opportunity to own a home that is priced right, affordable, and not over-inflated in value (as almost all homes arguably are today).
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