How To Contact Your Lender
Lenders want their money repaid in a timely way and the interest that comes with it they dont want your house. If you seem to be a good risk, the lender will offer to help keep your mortgage afloat, but be forewarned: If you seem like a bad risk, the lender might cut its losses by taking steps to foreclose and evict you as quickly as possible.
The key is to communicate with the lender before your debt gets the better of you. The sooner your lender knows of your problem, the more help it can provide. As you work to find mortgage relief, keep copies of all communications with your servicer, as well as records of who you communicated with. Follow up every phone call in writing, too.
Federal law requires mortgage servicers to help delinquent borrowers and work with them to get back in good standing. Tell your bank or lender that you want to learn about options for loss mitigation, the technical term for avoiding foreclosure.
Also, look for a letter from your lender describing options for avoiding foreclosure, along with instructions and applications for any programs that might apply to you.
Your mortgage servicer should also provide a contact person available by phone to answer your questions and provide accurate information about your options for avoiding foreclosure. By law, this person should be assigned to you within 45 days after your loan becomes delinquent, according to the Consumer Financial Protection Bureau.
How Can I Stop The Foreclosure Process
Up until the time your house is scheduled for auction, there might still be a chance to halt the foreclosure process. The key is communicating with your lender. The sooner you talk to your lender, the better. Many people feel intimidated by calling their lender and would rather avoid this uncomfortable situation by putting it off, but that can only hurt you in the long run.
Itâs not uncommon for people to face financial problems, and most lenders are sympathetic to that. They might ask you to provide proof of hardship or other financial information to help you work out a plan. There are also government agencies that offer counseling and other assistance one such organization is Making Home Affordable.
However, you should watch out for mortgage scammers that prey on desperate homeowners. Make sure anyone you talk to is calling from a number you can verify. To find a legitimate housing counselor, you can visit the U.S. Department of Housing and Urban Developmentâs website to get a list of HUD-approved housing counseling agencies.
âIf someone has approached you offering a quick fix and asking for money, it could be a scam,â Salazar says. âCall your local elected official or local nonprofit to understand what help is available to you, and do not hand over any money.â
Key Tips To Avoid Foreclosure
Did you know that every three months, approximately 250,000 American families are at risk of losing their home through foreclosure?
Once youve been foreclosed on, you not only lose your home, but your credit is negatively affected for 7-10 years. With a foreclosure on your credit, your ability to secure a new home for your family is significantly reduced, as is your ability to secure rental housing, auto loans, credit card, or other loans.
Because of the credit implications and the risk of losing your home it is important to avoid foreclosure as quickly as possible. If your lender has filed a default notice on your mortgage, there are a number of things you can try in order to prevent foreclosure.
Well go through all of these in more detail below. Keep reading to learn how you can stop foreclosure.
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How Do I Know If Im At Risk For Foreclosure
You dont have to be seriously delinquent on your mortgage payments to be considered at risk for foreclosure. If youre having difficulty making your payments every month, even if you havent missed one yet, you can still consider yourself at risk. For example, if youre living paycheck to paycheck and have very little discretionary income at the end of the month, you could be one extra expense or overtime cut away from missing a mortgage payment. Just barely scraping by every month could turn into a problem thats much harder to get out of at missed payment number four than it would have been earlier on in the delinquency. Foreclosure is something that, while it should be prevented altogether, can be avoided even when youre close to losing your home.
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File Bankruptcy To Stop The Foreclosure
Dont be confused because this is the first option were listing: Bankruptcy is a last resort, not the first choice. It has considerable impact on your credit rating, and it might not ultimately keep you in your home. But if youre down to the wire the foreclosure sale is days away bankruptcy is the best way to stop it immediately.
Once you file for bankruptcy petition, your creditors mortgage lender included have to suspend collection efforts immediately. This is known as an automatic stay. You still owe the money, but even if the mortgage lender asks the court to resume the foreclosure, this buys a couple of months or so to find a new job or solve whatever other short-term financial problem that keeps you from paying your debts. This also gives you a chance to work with creditors on a repayment plan so you might avoid having your home sold to pay your debt.
There are two types of bankruptcy that apply. Chapter 13 bankruptcy, which is designed to restructure your debts so you can pay them off over three to five years, is best if youre trying to keep your home. Chapter 7 bankruptcy, which liquidates your debts, might be the choice if youre stalling for time and have accepted that youre going to lose your home. You can use that time to save money to rent a place.
Discuss Options For Forbearance Or Loan Modification
Realistically, some financial obstacles create longer-term issues than just one missing payment. If you have a situation that means you might skip two or more payments, it is still best to talk to your lenderit doesn’t want the difficulties associated with repossessing your house. Your lender can review your situation and discuss options for either forbearance or loan modification.
In a loan modification, you might have longer to pay down your mortgages total balance in exchange for a more affordable monthly payment. With forbearance, you would get time, usually a few months, in which youre allowed to pay nothing, with all the missed payments due at the end of the forbearance.
Sometimes, just getting rid of the pressure to pay every month is enough to assess your whole financial picture and marshal the resources you have to keep your home.
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Best Ways To Prevent Foreclosure
Missing a house payment by a few days wont put you in danger of foreclosure. If you end up making the payment shortly after the due date, let your lender or servicer know it was paid, albeit late.
If you still havent paid by the end of the grace period, however , your mortgage lender has sent you past-due notices or youre multiple mortgage payments behind, you need to act quickly to get your mortgage back in good standing and avoid foreclosure proceedings.
Here are some options your lender might offer to avoid foreclosure. You might want to seek legal advice before going any of these routes:
Organize Your Financial Information
Along with the loan documents, you should gather and organize your financial information. Collect your recent pay stubs or a profit and loss statement if you’re self-employed, bank statements, federal tax return, and supporting documentation for any other income you receive, like Social Security, rental income, and alimony.
You should also figure out your total monthly income and your monthly expenses
Your servicer will need this information to determine whether you’re eligible for an alternative to foreclosure.
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Refinance With A Hard Money Loan
Your lender may refuse to refinance your loan if it considers you to be a high-risk borrower. In this case, you can contact a private lender to refinance with a hard money loan to stop foreclosure. Such loans generally have astronomical interest rates and fees, but one could allow you to buy the time you need to avoid foreclosure.
Bankruptcy will usually not buy you enough time to catch up on your debts more often than not, it merely postpones the inevitable.
Avoid Foreclosure Prevention Companies
You don’t need to pay fees for foreclosure prevention help — use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.
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How Resolve Can Help
If youre dealing with debt and not sure what to do, were here to help. Become a Resolve member and well contact your creditors to get you the best offers for your financial situation. Our debt experts will answer your questions and guide you along the way. And our platform offers powerful budgeting tools, credit score insights and more. Join today.
How To Stop A Foreclosure
If youve fallen behind on your mortgage payments due to a hardship such as job loss or divorce, and youre facing the possibility of foreclosure, youre not alone. Since the housing crash, millions of homeowners have lost their homes to foreclosure. The good news is there are things you can do to stop a foreclosure. The first thing you should do if you are having trouble making your mortgage payments is contact your lender. Communicating with your lender creates an opportunity for you to create a plan, which may include one of these four ways that can help stop a foreclosure:
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Stop The Foreclosure Sale Date
If you are deep in the foreclosure process and in a position that your foreclosure date is coming up soon, the options below may not be available. If you need to stop your foreclosure immediately, we have an option. We have attorneys that can stop your foreclosure all the way up to the week of the scheduled sale. You can read more on our Stop Foreclosure Immediately page or contact us today to learn more.
Contact Foreclosure Relief Programs
The Department of Housing and Urban Developments Federal Housing Administration has a website providing advice to consumers facing foreclosure. Check the site to see if you might be eligible for loan balance reduction or refinancing.
Many state government agencies also have free hotlines to help consumers facing foreclosure. These programs exist for one reason: to help people like you. Dont hesitate to see what they can do for you.
Also, check out our page on refinancing options for underwater borrowers.
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Hiring An Attorney Is The Best Way To Protect Against Foreclosure In Florida
If you are dealing with the possibility of foreclosure in Florida, hiring attorney Carlos M. Armor is the best option possible. With his legal services, you can feel confident that you will have the best defense for the situation. This is going to help you avoid this situation and minimize the possibility of the foreclosure being successful. Get in touch right away by calling 453-7200 to work out a plan of action to handle the foreclosure situation you are in.
Exiting Forbearance: Understanding Your Repayment Options
Figuring out a repayment plan for the payments missed during your forbearance period is the most impactful step to exiting forbearance. And its important to know your rights so you are able to consider all possible options when discussing repayment with your lender.
The options available to you will vary depending on your personal situation, loan servicer, and the type of mortgage you have. The repayment plans listed below are required options if you have a federally-backed mortgage, which includes all of the following types of loans:
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How Can I Apply For The Hemap Program
If you fall behind 60 days or more on your mortgage payments, the bank or mortgage company is allowed to send you a letter telling you that you are in default and letting you know about the HEMAP program. As soon as you get this letter, you should call one of the housing counseling agencies listed in the notice and schedule a meeting to make an application.
You cannot apply for HEMAP unless that letter has been sent to you.
You must attend a meeting within 33 days after the date on the notice if you want to apply for HEMAP and put a hold on the foreclosure process while your application is pending. You can attend the meeting after the 33 days and still apply for HEMAP but that will not stop the foreclosure process.
At the meeting, be prepared to explain the circumstances beyond your control that caused you to fall behind. The housing counselor will help you complete your application and will send it to the HEMAP program. If you apply for HEMAP on time, the bank or mortgage company cannot start a foreclosure case against you for up to 60 days while HEMAP reviews your application.
If your HEMAP application is denied, don’t give up. You have the right to appeal, simply by sending a letter to the address listed on the denial letter. Send your letter right away, because there is a 15-day deadline to file an appeal. The foreclosure process can resume while your appeal is being considered.
If You Want To Stay In Your Home
Your mortgage servicer can work with you to avoid foreclosure and see if theres an option to keep your home. If youre behind on your mortgage and not in forbearance or loan modification, these may still be options. So, its important to contact your servicer immediately as well as a HUD-approved housing counseling agency. Learn what to do you if you cant pay your mortgage.
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Do I Owe Money If The House Sells For Less Than I Owe
In the event that your home sells for less than the balance owed, the lender can file something called a deficiency judgment. This is a lawsuit that requests the borrower pay the remainder of the loan amount. For example, if you owe $300,000 on your mortgage, but the house only sells for $275,000, the deficiency is $25,000. A lender might try to collect the outstanding balance.
Some states, however, have anti-deficiency laws or restrict deficiency judgments after foreclosure.
They Understand The Law
There are more than a few laws that govern foreclosures, contracts, mortgages, and the rights of borrowers. Having an experienced foreclosure attorney like Carlos M. Armor on your side provides you with information about the law and what options you have.
Foreclosure law is always changing, so you need an attorney who knows what these laws are and stays abreast of the updates and revisions that have been made.
How Does A Foreclosure Impact Your Credit
Besides bankruptcy, foreclosure is one of the worst things that can happen to your credit. That impact doesn’t last forever, though. These are some of the ways a foreclosure plays a role in your credit:
- Lower credit score: The appearance of a foreclosure on your credit report can bring down your credit score. How much your score drops depends on several factors, such as what you score was before foreclosure and how many other negative marks show up on your credit report. The missed payments leading up to foreclosure also will have a negative effect on your credit.
- Limited access to credit: For several years after a foreclosure, your ability to qualify for a credit card, loan or other lending product may be restricted.
- Long-term negative impact on credit report: Missed mortgage payments and foreclosure will be reflected on your credit report for seven years. After the seven-year period ends, the foreclosure will be removed from your credit report and will no longer affect your scores.
- Difficulty securing another mortgage loan: Even if your credit score has recovered in the time since your foreclosure, its presence on your credit report could disqualify you from getting a mortgage loan in the future. Some lenders won’t consider approving a borrower if there’s a recent foreclosure in their credit history. If you are approved, expect to pay higher interest rates or extra fees.
How Do I Protect Myself From Being Taken Advantage Of
There are companies out there that do their best to take advantage of your struggles and try to get you to pay them for their services without ever planning on following through with them. Keep in mind that HUD-approved housing counseling services are typically free, so be wary of any company contacting you that charges a fee. The Federal Trade Commission outlines the most popular tactics:
The Mortgage Assistance Relief Services rule has made it so that it is now illegal for any company to collect fees until an offer of relief has been made and accepted. What does this mean? You don’t have to pay until the company lives up to their promise of getting you results. But remember, and we can’t stress this enough, there are plenty of reputable non-profit counseling agencies, approved by HUD, that will provide you with best help at no-cost.
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