How to Avoid Foreclosure

You may be scared and upset as you can't make your house payments and you are weeks from going into foreclosure, but do you realize that there is free help? Read on to learn about the different agencies and for ideas on how you can keep your home.

Difficulty: Moderately Easy

Instructions

1. Although you know what's in that envelope and you don't want to open it up, or if you hear the phone ring and you don't want to answer it, don't ignore the problem. The banks don't really want to foreclose on you, they want to know what's going on. If you let it go the farther behind you will be and the harder it will be to get back on track.

2. When you open the notice you will find that the lender will tell you about options to help you with making the payment. If you decide to ignore it, you will get scarier looking mail that will include important notice of pending legal action. Although you may not want to face it, failure to open the mail will not be an excuse in foreclosure court. So, if you have let the situation get to this point, do something about it now. There are more things that you can do to help yourself than you realize, so keep reading.
   
   Do not be embarrassed or try to hide from the situation. There is help out there.

3. Find out information on the internet from .gov websites that will tell you what your rights are. Read all of your loan documents and it will tell you what your lender will do in order to get you to pay. Locate your state website and get more information about foreclosure laws and any options you may have.

4. Is there anyway you can borrow some money. Can you sell your car, turn off your cable box? It's better to sell your big screen t.v. and couch and dining room set than it is to loose your house. You can always buy another tv. If possible, get another job and let your lender know that you were just hired and you will be giving their your whole pay check when you get it in two weeks and do just that.

5. The U.S. Department of Housing and Urban Development (HUD) is a wealth of information. They offer counseling and they will help you understand what you can do AND they will also represent you and talk to your lender for you. Find a HUD-approved housing counselor near you or call [phone] or TTY [phone].

6. If Your Problem Is Temporary - Call Your Lender and know these terms.
   
   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.
   
   
   Claim Advance: If your mortgage is insured, you may qualify for an interest-free loan from your mortgage guarantor to bring your account current. The repayment of this loan may be delayed for several years.

7. If selling your assets or getting another job is only a temporary fix and is only stalling the inevitable, tell your lender this. Contact a Realtor immediately who is familiar with dealing with a lender and get your house on the market.
   
   You may be offered less than what you paid for your property, but your lender may accept it as full payment. Ask them before you sign on the dotted line.
   
   Some loans are non assumable, but if yours is, you can have a buyer take over your payments. If you bought your house a few years back, then you probably owe more than it's worth and you won't find a buyer that will do that, but if you have had your home for 15 plus years, and you have already made a big dent in loan amount of your house, you may have a good chance of finding someone that would assume your loan, even a relative and then you can stay there and rent it.
   
   
   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, 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. This is why it is so important to tackle the problem right away before it becomes a problem you can no longer help.

8. There are a lot of places to get foreclosure help and the key is to get help right away. If you find a company that says they will help you and later on you will find you have run up a fee. Do your homework and only get help from a non profit organization or government organization or one that clearly says that there is no charges.

9. If you are losing your home because it was damaged in a natural disaster and or if you have been called up for active military duty, there is help for that.
   
   Call HUD and tell them at (800) CALL-FHA / [phone].

10. Remember this is only temporary until you can get back on your feet and you can always get these things back after you save your house.

11. There are a lot of companies that will prey on you at this time. If anyone says they will stop your foreclosure right away and just sign on the dotted line. Make sure the paperwork doesn't say you are signing over your house to them. If it sounds too good to be true, it probably is. No matter how bad it seems, do not let someone pay off your house if you give them the deed or counsel you for a fee. There is plenty of help out there without doing that.