Foreclosure Help

Solutions to Avoid Foreclosure

To begin with, you should be aware of the fact that, if you are unemployed or facing the prospect of unemployment, you still may be able to keep your home—if you follow the proper procedures. You can take comfort knowing that the Department of Housing and Urban Development/Federal Housing Administration and the mortgage industry have teamed up to try to prevent Americans facing dire financial situations from losing their homes.

Of course, there are other compelling reasons which may put your home ownership at risk. These include illness, the death of a relative, divorce, a reduction in work hours, or retirement. If you find yourself in such a situation, it's a good idea to take a close look at your current earnings and debts. Try where at all possible to reduce your spending, and eliminate spending on luxury items.

Contact Your Lender Immediately

Don't wait until you hit rock bottom to contact your lender. Instead, reach out to your lender as soon as financial difficulties surface. The natural tendency when you are in financial free-fall is to hunker down and hide, but that's actually the worst strategy to take. You'll need the support of your lender to help you keep your home.

Keep in mind that your lender is on your side—the company does not want to foreclose on you. And you should be aware of the fact that, just because you mention your financial troubles to a lender, that does not mean that the lender will impetuously move to collection. Foreclosure is an expensive proposition for lenders, and they too want to avoid it at all costs.

Establish a Debt Reduction Plan

It's important to have priorities in life, and that is certainly true when it comes to debts. If, for instance, you are unemployed, you should focus on those financial obligations of greatest concern: food, housing, and utilities. This means that any income available after paying for food and utilities should be channelled into housing.

If you have fallen beyond on your mortgage payments, you may qualify for a workout solution. This can be an incredibly convenient way to hold onto your house when you are facing tough times. Here are some possibilities for you if you are faced with this situation:

Reinstatement

In this situation, you would talk to your lender about providing the total amount owed by a particular debt.

Forbearance

You may be permitted to cut or even suspend payments for a brief time period. Then, you would pursue another option to bring your loan up to date.

Repayment Plan

This maps out a way to pay on your loan that is more in keeping with your financial situation. You resume making regular monthly payments, along with a portion of the past due amount until you are current with your loan.

Mortgage Modification

Your lender may be able to alter some of the terms of your original loan if you can make payments but you cannot afford the set payment amount. Your interest rate could be changed, or the length of repayment could be extended.

Claim Advance

If you have an insured mortgage, you might be able to obtain an interest-free loan from your mortgage guarantor in order to bring your mortgage up to date. In addition, you may have several years to repay the loan.

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