What To Do When You Are Facing Foreclosure

The dreaded notice has come from the bank and you know you are going to lose your home. Stop and think smart—there are ways to help prevent a foreclosure from happening or at least salvage the situation so you do not end up with bad credit or terrible credit reports.

If you fall behind on your mortgage, do not let the letters pile up. Take action now. Contact your lender or bank to see what actions you can take to halt the foreclosure or at least get you back on your feet. Look for solutions that do not capitalize interest—you may end up paying more later on. Request loan work out package and loan relief even if you are only a payment behind. This will be a long battle, but in the end you may end up keeping your home!

Working With Lenders

Collate your billing statements and coupon bills and set your mind to work. Many lenders will request proof of your current circumstances, such as pay stubs or unemployment checks, so it is good to be ready with copies. Negotiating early on can stop any actions from the lender. Remember, it is an expense for them to foreclose and you do not want to end up knee deep in attorney’s fees.

If your lender is difficult to contact or is not cooperating, make sure you document all conversations and transactions whether they are on the phone or online. Keep copies, printouts of your billing statements, any forbearance or deferment notices and take down names or employee numbers when you can. Remember the robo-foreclosure scandal and learn from it.

Check out HUD. Gov for listings on parties that can help you contact the lender as well as government programs that can help you manage your mortgage. Figure out a way to increase income or use existing assets to help you keep your home. Most of all, do not trust foreclosure prevention companies (use the cash for a good faith payment instead) or sign any documentation—you may be signing your title over!

It doesn’t matter—I’ll never pay off my mortgage!

If you are in too deep, you may want to consider placing your home on a short sale listing to stop the foreclosure from happening. Short sale homes are sold through the loss mitigation department of your bank. Investors buy your home for an amount (usually less than what it was worth). In essence, they pay your mortgage for you.

This process can take some time but also give you time to get back on your feet, especially if you know that your home and property values are in locations with good prices. Usually your mortgage lender is looking for a way out of losing money on your home as well and the investors or buyers (and yourself) will be thoroughly investigated before they can bid or purchase your property. A painful decision, but one that prevents foreclosed from showing up on your credit report and damaging your credit potential for up to seven years.

By: kelsheikh

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