Don't Just Walk Away From Your Home!

There are a myriad of unforeseen hardships that can change the joy of owning a home into an incredible burden. Maybe you've lost your job, or have unexpected medical bills beginning to pile up, or your monthly mortgage payments have increased beyond your current budget.

No matter what the cause of your troubles, ignoring the problem won't help, packing up and moving wont help.  It will only make the situation worse. You must take action to resolve the issue.

The following are a few examples of how to stop a foreclosure on your home:

1.  Look for Other Sources - Most homeowners don't realize they have a variety of resources that can aid in making mortgage payments to avoid foreclosure. Consider the income created by unemployment or disability insurance and your savings as possible cash-flow resources. Other examples include slashing the household budget by trading in expensive items like cars, boats, and motorcycles for cash. Even retirement funds can be used, but beware that many people with access to their retirement funds can be penalized for early withdraw and face increased income taxes.

2.  Determine the Type of Home Loan You Have - Is it conventional through Fannie Mae or Freddie Mac or is it an FHA loan?  If it is a Freddie or Fannie, you may be eligible for government sponsored options.  If it is FHA, you will have different options.  If it is an uninsured conventional loan, your options are more limited.

3.  Speak With a Government Housing Counselor -  A HUD-approved housing counselor will talk to you about your situation and help you decide what mortgage options are best for you.  It is advised to speak with a counselor before you speak with your mortgage lender, as unfortunately, many lenders are not up to date on all programs available.  This puts you in a better position to ask questions of your lender.
 
4.  Contact Your Lender - If you have reviewed all possibilities of creating cash-flow to pay your mortgage, then it's time to reach out to your lender. Do this as soon as possible! Your ultimate goal in contacting your lender is to create an agreement that will alter your mortgage so that foreclosure proceedings can be stopped before they are finalized.

5.  Review the Options - After contacting your lender, or in some cases the servicing company that handles the loan for an investor, you may have other options available. Typically lenders are not required to make adjustments to your loan, but many will consider it a viable option--one that benefits the lender and you and can include refinancing.

Possible options to discuss with your lender include:

• Refinance - If you would like to refinance and take advantage of lower interest rates, but don’t think you can (or haven’t been able to) qualify, you may be eligible for the government’s Home Affordable Refinance Program (HARP) 
   
  
• Modificaiton - Under this option, you reach an agreement between you and your mortgage company to change the original terms of your mortgage—such as payment amount, length of loan, interest rate, etc. In most cases, when your mortgage is modified, you can reduce your monthly payment to a more affordable amount.   
  
  
• Repayment Plan  - In this option the payments you have missed are added to the balance of the loan, making your account current. Your debt will increase and your monthly payments will be higher unless the lender also agrees to extend the term of the loan. 
  
  
•  Forebearance - With this option, you and your mortgage company agree to temporarily suspend or reduce your monthly mortgage payments for a specific period of time. This option lets you deal with your short-term financial problems by giving you time to get back on your feet and bring your mortgage current 
   
• Deed in Lieu of Foreclosure - In this option, your lender may accept the return of the title to your home. In many cases, your lender will require you to have your home on the market for at least 90 days prior to considering you for this option.  In this case, you may want to consider listing your home with a qualified short sale REALTOR® 
   
• Deed for Lease - The Deed-For-Lease™ option is a program from Fannie Mae that allows you to lease your home after you have transferred the title to your property to the mortgage company (commonly called a Deed-in-Lieu of Foreclosure). The lease terms are up to 12 months (with the possibility to extend longer). And the monthly rent is based on the current rental rates for your area—not on your original mortgage payment. 
   
• Short Sale - Considered by many one of the best options available to avoid foreclosure, the short sale is an increasingly popular option. In this option, the lender accepts less than what you owe on the property, relieving the homeowner of debt. Lenders are often willing to accept a short sale because it greatly reduces the expense and time involved in foreclosure proceedings. In most cases, a short sale does less damage to your credit than a foreclosure. A qualified short sale REALTOR® will be exceptionally helpful in completing the short sale process with you.

6.  Consult With an Attorney and/or Accountant about your options.  You can find local attorneys and accountants online or you can visit our Trusted Partners page.

One note of warning, beware of any company claiming that they guarantee they can stop any foreclosure no matter what you owe. The Federal Trade Commission recently compiled a list of warning signs that a "foreclosure fixer" company may be a scheme. Those warnings include any company that requires you to pay for services upfront, tells you to send mortgage payments to it directly, or asks you to turn over the property deed, or tells you to avoid contacting your lender directly.