How To Avoid or Stop Foreclosure
Foreclosure Avoidance Counseling
HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama's comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or refinance, to reduce your monthly payments and help you keep your home.
Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services.
Notice: Our toll-free 1800DEBT.COM number is primarily for consumers with credit card debt. The agencies that handle these calls and the programs that they offer, e.g., a Debt Management Plan and Debt Settlements, are not designed to handle foreclosures, at least not directly. Most consumers who are at risk of losing their home, however, are financially stressed and have credit card debt that they must also resolve, and doing so could help save their home. If you have credit card debt, by all means call 1800DEBT.COM (that's 1800-332-8266) for a FREE debt consultation. Or click here to apply online for debt relief and other options..
Contact Your Lender
Many people avoid calling their lender when they have money troubles. Most of us are embarrassed to discuss our money problems with others or believe that if lenders know we are in trouble, they will rush to collection or foreclosure.
Foreclosure is expensive for lenders, mortgage insurers and investors. HUD/FHA, as well as private mortgage insurance companies and investors like Freddie Mac and Fannie Mae, require lenders to work aggressively with borrowers who are facing money problems.
Lenders have workout options to help you keep your home. However, these options work best when your loan is only one or two payments behind. The farther behind you are on your payments, the fewer options are available.
Do not assume that your mortage problem will quickly correct itself. Don't lose valuable time by being overly optimistic. Contact your mortgage lender to discuss your circumstances as soon as you realize that you are unable to make your payments. While there is no guarantee that any particular relief will be given, most lenders are willing to explore every possible option.
Finding Your Lender
Check the following sources for lender contact information:
- Your monthly mortgage billing statement
- Your payment coupon book
- Search the web
- Directory assistance or phone book
Information To Have Ready When You Call:
To help you, lenders typically need:
- Your loan account number
- A brief explanation of your circumstances
- List of household expenses
- Recent income documents such as pay stubs, Social Security benefits statements, disability, unemployment, retirement, or public assistance. If you are self-employed, have your tax returns or a year-to-date profit and loss statement from your business available for reference)
Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a “loan workout” package. This package contains information, forms and instructions. If you want to be considered for assistance, you must complete the forms and return them to your lender quickly. The completed package will be reviewed before the lender talks about a solution with you.
Do Not Ignore Mail or Phone Calls From Your Lender
Your lender will try to contact you by mail and phone soon after you stop making payments. It is very important that you respond to the mail and the phone calls offering help. If your lender does not hear from you they will be required to start legal action leading to foreclosure. This will substantially increase the cost of bringing your loan current. Do not ignore contact from your lender.
Explore Loan Workout Solutions
First and foremost, if you can keep your mortgage current, do so. However, if you find that you are unable to make your mortgage payments, you may qualify for a loan workout option. Check with your lender to find out which of these options (or others) may be available.
Your lender may be willing to discuss accepting the total amount owed to them in a lump sum by a specific date. They will often combine this option with a forbearance.
Your lender may allow you to reduce or suspend payments for a short period of time after which another option must be agreed upon to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time in the future. The money might come from a hiring bonus, investment, insurance settlement, or a tax refund.
- Repayment Plan:
You may be able to get an agreement to resume making your regular monthly payments, in addition to a portion of the past due payments each month until you are caught up.
If it appears that your situation is long-term or will permanently affect your ability to bring your account current:
- Mortgage Modification:
If you can make the payments on your loan, but you do not have enough money to bring your account current or you cannot afford the total amount of your current payment, your lender may be able to change one or more terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways:
Adding the missed payments to the existing loan balance.
Extending the number of years you have to repay.
Changing the interest rate, including making an adjustable rate into a fixed rate.
- Claim Advance: If your mortgage is insured, you may qualify for an interest-free loan from your mortgage guarantor to bring your account current. The repayment of this loan may be delayed for several years.
Some workout options include expenses that you will be expected to pay, such as recording fees for a loan modification. Because every situation is different, you should be sure that you understand all the fees before signing any papers. To minimize the costs and particularly legal fees which can be very expensive, call your lender as soon as you realize you may be in trouble.
Avoiding Foreclosure When A Lender Won't Work With You
You've done all your homework, explored workout options, talked to a housing counselor and tried to talk to your lender. But, the lender won't work with you. What do you do now?
For an FHA-Insured Loan
Your lender has to follow FHA servicing guidelines and regulations for FHA-insured loans. If your lender is not cooperative, contact FHA's National Servicing Center toll free at (888) 297-8685, or via email. Whether by phone or email, be prepared to provide the full name(s) of all persons listed on the mortgage loan and the full address of the property including city, state and zip. They may be able to help you more quickly if you can also provide your 13-digit FHA case number from the loan settlement statement.
For a VA-Insured Loan
Contact the Dapartment of Veterans Affairs. If you need assistance or have questions, talk to a Loan Service Representative at 1-800-729-5772.
For Conventional Loans
If you have a conventional loan, first talk to a HUD-approved housing counselor at (800) 569-4287. They may be able to help you with your lender. You can also contact HOPE NOW or call the Homeowners Hope Hotline at (888) 995-HOPE to ask for assistance in working with your lender.
Speak To A Certified Debt Professional
We strongly suggest that you speak to several professionals in the housing industry. Obviously you can call anyone that you wish and speaking to 3 or more professionals may prove very beneficial in finding the right solution. So, by all means, be sure to check out the various resources listed on this page and website.
We highly recommend, however, that if you are also having trouble managing your debts and unable to make timely payment that you call 1800DEBT.COM for a FREE debt consultation. By calling this number you will not only be able to speak immediately to a "certified" debt specialist, but based on the area code you're calling from, your call will automatically be routed to a debt professional in your local area. Today, each state has their own laws, regulations and licensing requirements, so it's important to speak with someone who is familiar with your particular area. Call 1800DEBT.COM right now or click here to apply online for debt relief and other options..
In addition, the debt management specialist will be able to assist you in various ways depending on your particular situation. So do yourself and your loved ones a huge favor that could significantly change your lives and call right now and speak to a debt professional. The call is absolutely free, completely confidential and there is no obligation whatsoever. You truly have nothing to lose, except, that is — your debt!
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