Foreclosure is a situation in which a homeowner is unable to make mortgage payments as required, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract. Here are some steps to consider to help avoid foreclosure.
Communicate with your lender
As soon as you realize that you are going to have trouble making your mortgage payments, contact your lender and tell them about your financial difficulties. This gives them the opportunity to work with you to create a plan. Do not stop paying your bills, and do not wait until you cannot make payments before you act. Though you may feel scared or embarrassed, immediately begin working with your lender to avoid foreclosure on your home. Remember, lenders do not want your house. They have options to help borrowers through difficult financial times.
Don’t ignore the problem
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house. Open and respond to all mail from your lender. The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
Know your mortgage rights
Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office. Do some research; valuable information about foreclosure prevention (also called loss mitigation) options can be found online.
Find assistance
The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. Find a HUD-approved housing counselor near you by going online to HUD.gov or call (800) 569-4287 or TTY (800) 877-8339.
Prioritize finances
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses–cable TV, memberships, entertainment–that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.
Consider your assets–a second car, jewelry, a whole life insurance policy–that you can sell for cash to help reinstate your loan.
Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
Foreclosure scams
Beware of mortgage relief scams. One sign of a scam is when they ask for a fee in advance. Learn how to spot housing scams and report housing scams.
Scammers sometimes contact homeowners who are having trouble making their mortgage payments to offer them “help.” Criminals like this promise to help you keep your home or sell your home without having to go into foreclosure for a fee – but they’re just out to take your money, not help you.
These scam operators find potential victims in several ways:
Advertising online and in local publications
Distributing flyers
Contacting people whose homes appear in the foreclosure notices (they can easily find these notices online or in a local newspaper)
Targeting specific religious or ethnic groups
Report foreclosure scams:
File a complaint by contacting the Federal Trade Commission (FTC)
If the scam involves bankruptcy, contact a local U.S. trustee office
How to protect yourself
Learn about your legitimate government-approved mortgage and foreclosure help options. Be aware of these tricks that scammers use:
Offering to act as a go-between with your lender or to negotiate with your lender to refinance your loan
Advising you that they can stop foreclosure by ”helping” you file for bankruptcy
Encouraging you to sign fake foreclosure rescue or mortgage documents
Claiming that they can perform a forensic mortgage loan audit to help you hold onto your home
Offering you fake legal help
Don’t
Don’t send mortgage payments to any company that is not your loan servicer
Don’t sign any documents without having them reviewed by a lawyer or independent expert
Don’t stop making mortgage payments
Don’t forget that real help from the government is always free
Don’t give anyone your personal information, Social Security number or bank information without confirming their identity and that they represent a legitimate company
Don’t fall for rent-to-buy schemes or other mortgage fraud schemes
Source: USA.gov