Before answering the question about how to avoid a foreclosure, you first need to understand what foreclosure is. If you’re looking for a bit of free foreclosure help, below is a list of foreclosure questions and the answers to them.
I do not remember what type of mortgage loan I have, how can I find this information?
Typical information requested by lenders in a workout package include:
Through this website you have taken the first step toward educating yourself about available options. Determine if the layoffs will cause a financial hardship that will make it hard for your family to make your mortgage payments. If so, consider other resources that you have available to pay your mortgage. Review your spending habits and see where you can reduce spending. If you have a lot of consumer debt, consider contacting a non-profit, consumer credit counseling agency. Take advantage of any employer offered resources. If you still believe that you will have trouble making your mortgage payments, contact your lender right away.
Will there be any out-of-pocket expenses if I am approved for a workout option?
Some workout options do include expenses that the borrower is expected to pay, for example, recording fees for a loan modification. Because, every situation is different you should contact your lender for more information. However, if a lender has no contact with a borrower and has to start foreclosure, the legal fees that the borrower will be expected to pay can be very expensive. To avoid unnecessary legal fees, call your lender as soon as you realize you are in trouble.
What happens when I miss my mortgage payments?
Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, your lender or HUD could seek a deficiency judgment. If that happens, you not only lose your home, you also would owe your lender or HUD an additional debt.
Do not ignore the letters from your lender. If you are having problems making your payments, contact your lender immediately. Explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help.
Stay in your home for now. You may not qualify for assistance if you abandon your property.
Contact a HUD-approved housing counseling agency. They have information on services and programs that could help you. The housing counseling agency may also offer credit counseling. These services are usually free of charge.
Your options include the following:
You may qualify if your loan is at least 4 months delinquent but no more than 12 months delinquent; your mortgage is not in foreclosure; and you are able to begin making full mortgage payments.
When your lender files a Partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must execute a promissory note, and a Lien will be placed on your property until the promissory note is paid in full. The promissory note is interest-free and will be due if you sell or leave your property, or when your mortgage matures.
Pre-foreclosure sale: This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating.
You may qualify if the “as is” appraised value is at least 70% of the amount you owe and the sales price is 95% of the appraised value; the loan is at least 2 months delinquent prior to the pre- foreclosure sale closing date; and you are able to sell your house within 3 to 5 months (depending on what your lender agrees to).
An additional benefit to this option is the assistance you will receive with the Seller-paid closing costs.
Deed-in-lieu of foreclosure: As a last resort, you may be able to voluntarily “give back” your property to the lender. This won’t save your house, but it will help your chances of getting another mortgage loan in the future.
You can qualify if you are in default and don’t qualify for any of the other options
your attempts at selling the house before foreclosure were unsuccessful; and you don’t have another FHA mortgage in default.
Yes. Beware of scams! Solutions that sound too simple or too good to be true usually are. If you’re selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty. Be especially alert to the following:
Equity skimming: In this type of scam, a “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember that signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.
Phony counseling agencies: Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself, for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services call a HUD-approved housing counseling agency. Do this before you pay anyone or sign anything.
Are there any precautions I can take?
Here are several precautions that should help you avoid being “taken” by scam artist:
The best way to avoid home foreclosure from the get-go is to understand that the purchase of real estate is one of the biggest transactions most people will face in their lives. Given such great importance, it is essential that a potential home buyer enter the process with both eyes wide open and educated on how to correctly go about buying the right property for them so that foreclosure never becomes an issue.
What is the Best Way to Avoid Foreclosure Once the Process Has Begun?
Once the foreclosure process has run its course, it is too late. Foreclosure leaves a black mark on the homeowner’s credit history that may stay with them for as many as 10 years, making it harder and more expensive to obtain credit and to purchase things for anything other than cash.
Mistakenly, many homeowners facing foreclosure wait until the 11th hour to try and do something about it in order to avoid the after effects of home foreclosure. Once in default, the homeowner faces the real possibility of losing his or her home. Fortunately, there are a number of things that can be done to avoid home foreclosure:
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