How to avoid FORECLOSURE (OVERVIEW)
It is possible to avoid a foreclosure, even if you are behind on your mortgage payments. Here are some tips:
- Don’t ignore the problem, and don’t try to avoid your lender. The further behind you become on your payments, the harder it will be to reinstate your loan and the more likely that you will lose your home.
- In certain kinds of loans (such as FHA-insured loans), lenders are required to work with homeowners to prevent foreclosures. In these cases, a lender and homeowner can prevent a foreclosure by making a repayment agreement; by modifying the loan to refinance the past due amount into the loan payment; or by making a forbearance agreement, which postpones a part of the mortgage payment for a temporary period of time until the homeowner’s finances recover. To qualify for these options, you must be at least two payments behind; your nonpayment must be due to circumstances beyond your control; and you must have the present ability to begin making current payments.
- If you do not have an FHA-insured loan, ask for the loss-mitigation department at your mortgage company. (Loss mitigation is another term for “foreclosure prevention.”) The sooner you request loss mitigation, the better. That’s because foreclosures are expensive; if your case is referred to an attorney for foreclosure, the amount you owe can more than double in a very short period of time. When you contact your lender, be sure to have your loan account number, recent proof of income, and an explanation for your circumstances.
- Foreclosures do not necessarily go to court and only take an average of three months to complete. If you request loss mitigation, your lender will ask you what all of your monthly expenses are. Your lender is trying to determine whether you have the ability to begin making payments again if he or she helps you. Your lender will also ask you why you got behind on your payments. Your lender is trying to determine whether you will get behind on your payments again. If you are accepted into the loss mitigation program, paperwork will be sent to you for your signature. It is very important that your return the paperwork by the deadline. If you accept the changes and return the paperwork on time, the foreclosure sale will be cancelled.
- 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 (often two or three month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free of charge.
- Don't lose your house to foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.
TALK TO A LEGAL AID LAWYER NOW! Click here to see if we can help with your type of legal issue and income requirements. Learn what you should do before calling 1-800-9 LAW AID or use our online confidential interview (coming soon) to see if you pre-qualify for free legal aid (based on income and legal issue type).
PRINT THIS FACTSHEET - Fact Sheet - How to Avoid Foreclosure
ATTENTION! If you have had your Medicaid/HCIP benefits terminated or have applied for Medicaid/HCIP and have not received a decision, please contact our Helpline for possible assistance. Learn More >>.
1-800-9 LAW AID
Help meet the overwhelming need for access to the justice system for moderate-income individuals and increase your business while serving lower income clients.
What now? After you get your resource visit CourtHelp™ to learn about the court process.