The number of home foreclosures are gradually dropping but there are still 4.2 million loans in a delinquent or foreclosure status (USA Today). Consumers need to be educated on what they can do to keep their home from being foreclosed.
The most obvious way to avoid a foreclosure is make the payments on time. However, if this is not possible there are some steps to take to avoid falling behind in payments and possible foreclosure:
Know Your Mortgage Rights
Every homeowner should read all loan documents carefully. These documents spell out exactly what the lender can and can’t do in the event the homeowner cannot make or is behind in loan payments. Be sure to find out what and how much any fines or fees can be assessed by the lending agency. Loan documents also contain information regarding the rights and responsibilities of the lender and lendee.
Read all Mail
You must read and answer all correspondence from your lender. Do not throw away any letters or claims. Keep all correspondence you receive for future reference.
Know the Foreclosure Laws in Your State
Become familiar with foreclosure laws in your states. Follow the link in the resources section to find laws in your state.
Unemployment Protection
Some states offer unemployment or underemployment protection. Each state defines the filing dates and requirements. Federal law requires lenders advise you that you are entitled to receive financial counseling if not employed.
Contact the Lender
Many people avoid calling the lender because they are embarrassed to discuss money problems. Many lenders have options available to consumers to help you keep your home. These options typically work best for loans which are one or two payments behind. The farther behind in payments the fewer options available to the homeowner.
Contact a Financial Counselor
A legitimate financial counselor can help you work through financial problems. NeighborWorks America can help you find counselors in your area. Follow the link in the Resources section below to locate resources in your state.
Prioritize Your Bills
Take a long look at your bills. Make paying the mortgage one of the top bills to pay.
State and Local Resources
Many states and local governments offer resources to help homeowners who are about to default on their loan. Some states provide legal assistance, consumer credit counseling and emergency homeowner’s loan programs. The U.S. Department of Housing and Urban Development provides links for each state on available programs. Follow the link below in the Resources section.
Hope Now
Hope Now is an organization which helps homeowners stay in their home. They are a counseling service which works to find a solution to your problem.
Sell Assets
Attempt to sell assets such as jewelry, whole life insurance policies or a second car to bring the note current.
Avoid Foreclosure Scams
There are some unscrupulous people who attempt to take advantage of people in need. This is a vulnerable time for desperate homeowners. Don’t become a victim to scams. Beware of anyone who offers to negotiate a loan modification or guarantee to stop or delay foreclosure for a fee. Always check their credentials, reputation and experience prior to utilizing their service.
Resources:
- U.S. Department of Housing and Urban development, HUD.GOV
- Foreclosure Resources in Your State, HUD.GOV
- Julie Schmit, Foreclosures May Have Crested, But Recorvery’s Slow, USA Today, June 2011
- OCC Consumer Tips for Avoiding Mortgage Modification Scams and Foreclosure Rescue Scams, Comptroller of the Currency, U.S. Department of Treasury
- NeighborWorks America
- State Foreclosure Laws, Foreclosures.com
- HopeNow.com
Karren Bennett - Karren Bennett is a Texan at heart who loves to write. In addition to writing about anything and everything, she dabbles in fitness, ...
