How to Avoid Foreclosure

The housing industry is the worst since the Great Depression. Learn how to avoid foreclosure and save your home, family, and future.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Mortgage contract
• Mortgagor information

1. There are ten essential steps you can take to avoid foreclosure on your home. In addition to these, lenders often have their own programs to keep their customers out of foreclosure if you contact them soon enough. Studies have shown that mortgage lenders send mailings to their customers as soon as the lender gets a hint that the borrower is having trouble. But very few of those mailings ever are opened.
   Fear sets in and borrowers choose not to face possible foreclosure, assuming that the mail contains very bad news, which is not always the case. This is part of the reason people face extreme action by their banks.
   It is very important that you open and respond to every piece of mail from your lender. You could be ruining any chance of saving your property by ignoring their correspondences.
2. Call your lender immediately after receiving a notice of impending foreclosure. Be honest.
   What was the reason you stopped making payments? It might have been employment lay-off, catastrophic illness, high heating bills, etc. Whatever your reason, you must be completely honest. Often, you will be required to prove your reasons for missing payments.
3. While speaking with the bank, express your desire to keep the house. They don't want to foreclose any more than you want to lose your house.
   What are your current resources? Employment status, your current monthly income even it is zero, any stocks or other investments you might own, welfare, disability payments, retirement, and savings that can be utilized to help you get caught up.
   Ask the lender to place your missed payments on the end of your loan.
   Six of the largest mortgage companies have plans in place to help troubled homeowners. Ask about freezing your payment for 30-90 days until you get back on your feet.
   Explain that you will remedy the situation as soon as possible. If the lender hears how sincere you are in keeping your home, they can and will assist you.
   What are your plans? This is the time during the conversation where you have an opportunity to convince the lender that you will do everything in your power to save your house. Attitude and out look will be the strongest influence on how far the lender will go to help you. Writing a short-term payment plan that shows your willingness to sacrifice and live a more simplified lifestyle is important. Think of ways of procuring additional income in your plan. If you have gained financial assistance of some kind on your own, it would be beneficial to share.

Tips & Warnings

• If your lender is not willing to help save your house from foreclosure, contact Project Lifeline, HUD, or FHA for further assistance.
• Sometimes a short sale (sell your house quickly for the balance of your loan)is the only option. If you sell for less than what you owe you may have to pay back the difference.
• Bankruptcy is always a choice but should be the last resort.
• Contact lending companies like Virgin Money (www.virginmoney.com) or Prosper (www.prosper.com) for help.
• For the past several months, The Federal Housing Administration (FHA), along with HUD, Housing and Urban Development, has been working together with mortgage lenders to identify solutions for the homeowners in crisis. Even if your current loan is not FHA insured, you can still take advantage of this important program to save your home.
• Visit www.guidetopreventingforeclosure.com for a complete guide about how to avoid foreclosure
• Be wary of fraudulent companies professing to have all the answers to avoid foreclosure. There are many of them. Do not pay upfront fees for foreclosure assistance.
• Read the contract. Know what you are signing. Many borrowers didn't realize what the contract said and that's how they got into trouble in the first place.