| You bought a great a house a few years back. | | | | 6) Don't over-promise and under deliver. Follow |
| You were so excited about achieving your dream | | | | thru as promised with any payment plans. If you |
| of homeownership. | | | | promise an extra $500 per month until you are |
| Today, the dream has become a nightmare and | | | | caught up, you better deliver. Failure to execute |
| you are now facing foreclosure. How can you | | | | your promised agreement with result in no more |
| avoid this? | | | | agreements. |
| Steps You Can Take to Avoid Foreclosure and | | | | If you do all of this, you will likely end up stopping |
| Save Your Home: | | | | the foreclosure. |
| Not paying on your home loan is far different | | | | Here are some of the options you have in trying |
| than not paying your credit card bills. | | | | to save your home or your credit: |
| Your home is a secured debt. This means that | | | | You can seek reinstatement in full of your |
| when you stop paying the lender will take back | | | | mortgage if you bring late payments current in |
| the house. Foreclosure. | | | | one lump sum by a specific date. |
| Early on in the default process, you can still come | | | | You can get a forbearance agreement where you |
| back from the brink if you haven't missed more | | | | are allowed to delay payments for a short period |
| than one or two monthly payments and the | | | | with the understanding that another option will be |
| lender hasn't spent too much trying to get you | | | | used afterwards to bring the account current. |
| back in line. | | | | You may seek a repayment plan, whereas the |
| As the foreclosure process moves along, the size | | | | lender might agree to let you catch up by adding |
| of the delinquent debt owed and the bank legal | | | | a portion of the past due amount to a certain |
| costs that customers are usually charged mount | | | | number of monthly payments until your account |
| higher. | | | | is current. |
| Borrowers, who try to ignore their financial | | | | You may ask for a mortgage modification where |
| problems, and their lenders' phone calls, will likely | | | | you can make your regular payment now, but |
| lose their homes. | | | | cannot catch-up the past due amount. In this |
| Around 40 percent of people who are behind on | | | | case, the lender might agree to modify your |
| their house payments never contact the lender. | | | | mortgage. |
| This is a huge mistake. | | | | One solution is to add the past due amount into |
| Understand that the foreclosure process is a | | | | your existing loan, financing it over a long term. |
| well-oiled machine. Let's say your payment is due | | | | This is a very popular method. |
| on the 1st. Once the 16th rolls around and you still | | | | Modification might also be possible if you no longer |
| haven't paid, the bank starts to look closely at | | | | have the ability to make payments at the former |
| you and the machine starts rolling. | | | | level. The lender can modify your mortgage to |
| Once this gets to 90-100 days, they are hitting | | | | extend the length of your loan. |
| you for legal fees on top of your mortgage | | | | For example if you have 25 years left on your |
| payments, and you are in real danger of losing | | | | loan, they may extend it to 28 years to help. |
| the home. | | | | You may want to sell the house to save your |
| However, taking your house is the LAST thing | | | | credit. If catching up is not a possibility, and you |
| the lender wants to do, no matter how much | | | | let the lender know you are selling it, he might |
| equity you have. | | | | agree to put foreclosure on hold to give you |
| Banks are in the business of loaning money. They | | | | some time to attempt to sell your home. |
| are not in the real estate sales business. | | | | If none of that works.... |
| Foreclosing is expensive, it's burdensome, and it's | | | | If you can afford the normal monthly mortgage |
| stressful. No one wants that to happen. They | | | | payment, but can't afford to make up the |
| want to get your loan back on track. That's the | | | | delinquent amount and legal fees because the |
| goal. | | | | lender is proposing a relatively stringent |
| How do you stop it then and get it back on | | | | repayment plan, you may want to consider filing |
| track? | | | | Chapter 13 bankruptcy. |
| 1) Get serious about stopping it. Put your pride on | | | | This temporarily halts the foreclosure process. |
| hold and don't be embarrassed. Talk to the lender | | | | The mortgage lender may have to accept a |
| about all options. | | | | more borrower-friendly repayment plan, such as |
| 2) As soon as you know you are going to be late | | | | one that grants five years to repay the amount |
| on your first payment, contact the lender. | | | | in arrears rather than one or two. |
| Communication and honesty is appreciated and will | | | | If you just need some extra time to sell your |
| be rewarded with understanding. | | | | home consider refinancing via a "hard money" loan. |
| 3) Never ignore the lender's phone calls or letters. | | | | While they have very high rates and fees, the |
| Ignoring it makes it worse and expedites the | | | | loans, usually from private individuals, can give |
| process. If you don't communicate the problem | | | | people the couple extra months they need to find |
| with them, they will simply assume you don't care | | | | buyers. Most banks will be more than happy to |
| and will be more aggressive in their strategy to | | | | take cash no matter how close it is to the |
| take the home. | | | | foreclosure sale too. If a relative steps in with |
| 4) Stay positive. Your situation is not hopeless. | | | | $10,000 to bring the loan current, a borrower can |
| Lenders deal with cases everyday like yours. You | | | | usually just hand it to the lender and go back to |
| are not alone. No matter how angry they sound | | | | business as usual. |
| with you, do not take it personally. There are | | | | You must understand that late mortgage |
| proven collection methods and they are going to | | | | payments are very serious. Although they want |
| use them on you. | | | | to work it out with you, the lender is not going to |
| 5) Be honest about what you can do and be | | | | simply let you negotiate a payment plan to bring |
| willing to sacrifice. They are not going to accept a | | | | you up to date with a review of the file. |
| payment plan where you pay back $100 per | | | | Plan on sharing with them all of the details of your |
| month in what you have in arrearages. You are | | | | current financial situation including income and |
| going to have to show them you are committed | | | | expenses. |
| to keeping your house. It may hurt financially but | | | | Open communication and honoring whatever deal |
| if you want to keep your house you will make | | | | you reach is the key to saving your home from |
| the sacrifice. | | | | foreclosure. |