How to Avoid Foreclosure in a down Real Estate Market

This article will hopefully help a few of you facing hard times avoid foreclosure and some of the scams that are after your equity.

Difficulty: Challenging

Instructions

1. 
    

   The first step to avoiding foreclosure is to identify your goals. Do you hope to keep the house or sell it and move on with some of your equity? You will need to determine the equity you have, and if it is enough to be worth fighting for. I have an article on determining equity. Also sit down with your spouse or anyone involved in the decision and map out why you are in the situation you are in, and how can improve your situation, so if you catch up home payments it is not just a temporary fix. Can you improve your income? Cut your expenses? Especially large ones like medical and car payments. Can you make your home payments a priority before paying credit cards or other unsecured debt?

2. Contact your lender as soon as possible if you are delinquent in payments. They will be much more willing to work with you if you are in communication. Do not wait until they call you. Tell them where you are and explain you want to keep the home, or sell the home, and what steps you are taking. Be realistic in time frames you tell them you need to make a payment, and do everything you can to follow through on what you say. If your situation is a temporary set back explain it and let them know why it will improve soon. If not talk and find out options.

3. 
    

   Seek out advice from professionals. Talk to a few licensed real estate agents, especially ones who specialize in foreclosure and short sales. Contact attorneys who specialize in real estate. Contact licensed mortgage brokers for refinance options and their knowledge of foreclosure laws in your state. List and identify your options. Consult a few people before you jump on any one persons idea.

4. Do not sign over title to your home to an investor. You loose control and they do not have your best interest in mind. Most scams involve giving up control. In spite of what they may say the bank will not foreclose on them if they don't make payments. You may have signed over your title to them, but the mortgage loan and its consequences are still in your name. Unless they pay it off you are still the one the bank goes after. The loan is yours. Some legitimate investors may catch up your payments to gain time to sell your home without the risk or expense of buying it outright. This can work, but be very cautious. Do not sign any contract with a 3rd party without advice from an attorney and or a licensed experienced agent who has seen the scams. Review every decision fully.

5. Contact Government Agencies. HUD has an approved list for housing agencies. Free counseling is often available locally. Seek counsel from a group that is not trying to buy your house or profit from the situation. The U.S. Department of Housing and Urban Development has a list of HUD approved housing agencies. Go to www.hud.gov

6. Report any suspected scams or companies making extreme promises to your states Division of Real Estate. The only guarantee to save your home is to make the payments. Anything else is up to the rules and mercy of the lender. If someone tries to take advantage of you do report it so you help others and shut down the bad schemes to take peoples money.

7. My last advice is do what you can to catch up late payments as soon as you can, even only one at a time if you are not so far behind you will never catch up. The bank works with you if you are showing effort and progress. Hold a yard sell. If you hold stock or other financial instruments that you can cash out do so and pay the mortgage. Why hold stock for the future if you lose your home today? If you own your car or have good equity refinance it with your bank or credit union. You may be able to take cash out at a low interest rate. Avoid high interest title loans or payday lenders. They will make things worse very quickly unless you know exactly where the money will come from and when you can pay them in full. If you know that you have better options normally anyway. High interest is a horrible trap.

8. The final option is to declare bankruptcy. This is a very last resort. It will only slow down foreclosure and brings its own set of new problems and expenses. Only do this after every option is exhausted. It is as bad as foreclosure on your future borrowing options and may get you both. Talk to a good bankruptcy attorney and know exactly what it does and for how long. Pray and ponder this step as it does little to solve things ultimately, and is at best a short term stall. It does not pay your mortgage. It only buys time.

Tips & Warnings

• With any major financial decisions consult licensed, competent professionals. Get more than one opinion. Talk openly with your spouse or significant other. I am often shocked as a Realtor to see how far people are in trouble, and their partner has no clue. Communicate and get input. The relationship means more than the short term money problems.

[iknewthat]

on 7/8/2009 Great article and a superb job indeed. 5*

[goodselfme]

on 6/30/2009 good tips to avoid foreclosure.

[MotherDove]

on 2/11/2009 The information in this article on avoiding foreclosure is sure to be a blessing to more than a few families. Thank you for your research and insight into one of the scariest challenges of this recession.

[hoolihan0519]

on 2/10/2009 Excellent article. Very timely information. Thanks! RCR.

[Vanillatte]

on 2/8/2009 Excellent article filled with professional advice! 5*