What To Do If You Are Facing Foreclosure

First, you are not alone. There are many Americans facing the exact same situation you are. Many of them, don’t know just how close they are to foreclosure. Here are a few of the warning signs that you are nearing possible foreclosure, followed by some terms to review with your lender to see if any of these are options for you. Finally, a couple of helpful links are provided, as resources.

Signs you may be near foreclosure:

• Maxing out credit cards
• Using credit to pay for day-to-day expenses, such as groceries, utilities, etc.
• Being unable to pay your bills on time
• Paying only the minimum amount on credit cards
• Applying for new credit cards after maxing out on existing ones
• Having to choose which bills to pay


Understanding the terms:
If you are working with your lender to keep your home, known as retention, there are several options:

Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.

Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.

If you and your lender agree that you can not keep your home...
There are a number of liquidation terms you should understand:

Short Payoff (also referred to as a Short Sale): If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale. If this is an option for you, we have a network of experienced Real Estate Brokers to assist you.
Deed-in-lieu of foreclosure: A Deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.

Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.

Loan Modification: A loan modification is very similar to a lower interest refinance where the lender lowers the interest rate on the existing loan to lower
the payments.

A list of DO's and DON'Ts to remember when going through this difficult time:

• DO answer the phone and read your mail. Avoiding your lender won't make the problem go away. In fact, it will only make the problem worse. Your lender may be able to help you, so be sure to answer the phone and read any mail they may have sent you.

• DO realistically assess your situation. Are your financial problems temporary? If you are temporarily out of work and will be fine once you find a new job, call your lender. Lenders may be able to offer a forbearance or repayment plan.

• DO consider your options. If you are not in a position to keep your home, consider selling it before you face a foreclosure. If you have already missed a mortgage payment, call your lender. There may be purchase options, like a short payoff or assumption (see links and resource section) that help avoid foreclosure. Talk to a lawyer or legal aid organization. Your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to the Legal Services Corporation, a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.

• DO be aware of certain financial responsibilities. Even if your lender sells your property, you may still be responsible for the difference in the sale price and what you owe. It is also important to realize that you may be responsible for certain taxes when a lender forecloses on your property. However, the IRS does provide tax relief in certain situations.

• DO protect your wealth. Recognize that you may have significant equity in your property that must be preserved.

• DON'T move out of your home. In order to qualify for assistance, homeowners are often required to be living in their home. Be sure to talk to your lender before you think about moving.

• DON'T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions.

• DON'T convince yourself you can afford a home if you can't. Most lenders will only lend what a borrower can afford, but some less scrupulous lenders will allow borrowers to get in over their heads. In some cases, a home that was affordable becomes unaffordable due to changes in your life circumstances. If your mortgage is truly beyond your means, consider selling your home and purchasing a less expensive home or renting for a period of time before the only option left is foreclosure. Call your mortgage company; they may be able to help you avoid foreclosure by agreeing to an assumption or a short payoff.

• DON'T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions. Talk to a lawyer or legal aid organization, since your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.

• DON'T fall victim to a scheme. Some people want to profit by your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf – for a fee. ONLY talk to legitimate Realtors ®, Lawyers, Counselors, or your lender DIRECTLY!!!

Helpful links and hotlines: http://www.housinghelpnow.org/ , http://www.hopenow.com/
http://www.makinghomeaffordable.gov/

Foreclosure hotline: 1-888-995-HOPE