Techniques to Negotiate & Stop Foreclosure With a Lender
Foreclosure threats are automated. Once you default on your mortgage agreement by missing monthly payments, lenders have a legal obligation to notify you of the pending consequences. Receiving foreclosure threats is not a reason to avoid communication. You can learn opportunities to catch up on your mortgage payments and obtain better mortgage terms through negotiation.
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Hardship Letter
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Lenders often have mortgage assistance options for homeowners, but before you can be approved, you must complete a hardship letter detailing your current financial circumstances. A good hardship letter evokes emotion but is not too vague. The primary purpose of the letter is to explain how the dates of your delinquency coincide with events that led to your hardship. Keep the letter brief and include your desire to remedy your past due mortgage through any available solution. Enclose copies of your monthly bills and pay stubs to support the claims in your letter.
Counseling
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HUD-certified foreclosure counselors are one of your biggest allies when seeking mortgage assistance through your lender. A counselor can review your hardship letter and help you prepare supplementary documents. Counselors understand state real estate laws and can review your current mortgage agreement to ensure there were no unfair practices when your loan was issued. These factors help further your negotiating position when communicating with your lender. If there are local programs that offer financial assistance, your counselor can provide you with the criteria and contact information.
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Advocacy Groups
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Not everyone is thrilled at the thought of hard core negotiations with big businesses. Instead, the emotional ties to your home may leave you feeling vulnerable throughout the process. Use your resources and have someone else negotiate for you. Private advocacy programs like the Neighborhood Assistance Corporation of America (NACA) can communicate with your lender on your behalf until reasonable terms are met.
NACA requests documentation from you regarding your current income and expenses and counsels you on how organize your monthly budget. They also calculate what an affordable mortgage payment should be based on your current household budget and use this figure as a point of reference when negotiating with your lender.
Foreclosure Paused
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When you are in negotiation to modify your mortgage through a prevention program, the foreclosure process is paused. This can be helpful in buying you time to research more prevention options in case the lender's programs do not meet your needs. You may also have time to find a family member or friend who can loan you the amount of the past due balance if no other options exist.
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