If you are facing foreclosure, it is important to know all your options. Many foreclosures are caused from job loss, unexpected medical bills, or divorce. Typically, these are once-in-a-lifetime occurrences; therefore, contacting your mortgage lender and informing them of your situation is vital to your credit as well as keeping your house. If you are facing any of the above mentioned financial issues, the following steps could help you avoid losing your house.
• Contact Your Mortgage Lender – If you are having problems making your mortgage payment, contact your lender immediately. The loss mitigation department will be able to assist you with options from refinancing, loan modification, or forbearance. Explain your situation, then follow-up with an email or letter thoroughly describing what has occurred that has caused a financial hardship and then send documentation to the lender to support your situation.
• Maintain Your Residence – Stay in your house. Most of the recent government assistance programs are all based on housing that is owner-occupied. Once you move out of your property, you will lose many protections issued by these recent laws.
• Contact an Approved Housing Counseling Agency – Contact the Department of Housing and Urban Development (HUD) and seek out a HUD approved advocate to act as a liaison between you and your mortgage lender. The housing counseling agency should be well-versed on all the government programs that may benefit you. The housing counselor should be knowledgeable on any private or local organizations which may offer assistance. Assistance from a HUD approved housing counselor should be free of charge.
If after talking to the housing counseling agency you may decide that your best option, due to your financial situation is to sell your property to avoid foreclosure; there are other options, which include: short sale, or deed in lieu. A short sale is when the mortgage holder accepts a lesser amount than is owed on the mortgage. This usually occurs when the mortgage is greater than the value of the property. It would be necessary to contact an experienced real estate agent who has successfully handled short sales in the past. A deed in lieu is when you voluntarily give back your property to the lender. If you choose this route, your credit will not be as damaged as if you went through a foreclosure; whereas, the benefit to the lender is that they will not have to go through the expense of foreclosing on the property.
In summary, the first step to take to avoid foreclosure is to contact your mortgage lender and thoroughly explain your financial hardship. Send a detailed follow-up email or letter to your lender with supporting documentation of your hardship. Second, seek out the assistance of a HUD approved housing counseling agency. Thoroughly explain your situation to the HUD approved counselor and cooperate by providing any documentation requested to support your situation. They should work on your behalf to help you save your home, or at a minimum help you minimize the damage to your credit.