How to Keep the Bank at Bay During a Foreclosure
A record number of U.S. homeowners--2.8 million--received foreclosure filings in 2009, according to real estate data provider RealtyTrac.com. If you are struggling to pay your monthly mortgage payments, and you're worried about losing your own home to foreclosure, it's time to call your bank or lender and ask for help. It might be the only way to keep the bank at bay.
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Things You'll Need
- Copy of your most recent mortgage statement
- Copies of your credit card statements and other loan--student, car, personal--statements
- Copies of your most recent paychecks
- Copy of your latest federal income tax return
Instructions
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1
Gather the paperwork that you'll need to prove to your lender or bank that your gross monthly income has decreased because of a financial hardship, while your monthly debt obligations have not. Make copies of your most recent federal income tax return, last two paychecks, credit card statements and other loan statements.
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2
Call your mortgage lender or bank as soon as you begin struggling to make your payments. Explain that you've suffered a financial hardship--a job loss, drop in annual income or medical condition that has kept you from earning money--that is making it impossible for you to pay your monthly mortgage bill. Tell your lender that you're worried about possibly losing your home to foreclosure.
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3
Ask your lender for a loan modification that will lower your monthly mortgage payments to a more affordable level. This might mean that your lender or bank will reduce the principal balance that you owe on your mortgage, lower your loan's interest rate or revamp the terms of your loan. Each of these solutions will lower your monthly mortgage payment and help you keep your lender or bank from taking your house as part of foreclosure proceedings.
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4
Compose a financial hardship letter if your bank or lender requires one. This letter puts into writing the reason why you can't make your loan payments. Include your request for a loan modification as part of your letter.
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5
Send the copies you made in Step 1 along with your financial hardship letter to your bank or lender. Your bank will study this evidence to determine if your financial hardship is significant enough to make your loan payments unaffordable.
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6
Agree to a specific modification if your lender approves your request to hold off on a foreclosure.
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Tips & Warnings
Don't be embarrassed to call your lender or bank as soon as you begin struggling to make your payments. Lenders don't benefit when you lose your home to foreclosure; it is in their best interests then to work with you to turn your payments into affordable ones.
