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For many Americans facing the possibility of foreclosure, the sad reality is that the foreclosure fiasco can sometimes be avoided.
The first and most important element of avoiding foreclosure is to take action quickly. Don’t deny you are in financial trouble. Face the reality that you are falling behind on mortgage payments, credit cards debt, utility expenses, taxes and other bills. Denial is a typical human response to foreclosure. Don’t let denial prevent you from solving the problem.
Face the fact that you are in foreclosure and begin to work on a plan with your lender. Contact the lender early and frequently. You are in a race against the foreclosure clock. Each state has foreclosure laws and a foreclosure timeline. It’s critical that you know and understand the foreclosure laws where you live — and understand how much time you have to solve the foreclosure crisis.
When you contact your lender, find out what options the lender has available for homeowners facing foreclosure. The earlier you call your lender the more options will available to you.
Secondly, homeowners should contact the U.S. Department of Housing and Urban Development (HUD) and call a HUD-approved housing counseling agency to act as a middleman between the lender and you as the homeowner. The HUD website has the name, address, telephone number, e-mail, and website addresses of thousands of HUD-approved housing counselors who can help you understand the foreclosure process in your state and what your options are. These HUD-approved housing counselors are private and public organizations that have been screened by HUD and are reputable groups that help you try to negotiate a repayment workout deal with your lender.
A deed-in-lieu is a potential way out of foreclosure for distressed homeowners who are hard pressed to find their way back to financial solvency. It may not always be the best way, but it can be much better than going all the way through the foreclosure process or filing for bankruptcy.
If you want to keep your home, you will need to tighten your financial belt. Look for ways to cut spending and increase income. Prepare an itemized monthly budget and project both income and expenses. Sell any stocks, bonds, cars, boats or other items that can be converted into cash. Sacrifices are necessary. Sell items you don’t need.