If you are facing foreclosure, it is important to know all of your options. Many foreclosures are caused by job loss, unexpected medical bills, or divorce. Usually these are once-in-a-lifetime events; therefore, contacting your mortgage lender and informing them of your situation is vital to your credit, as well as keeping your home. If you are facing any of the financial problems listed above, the following steps may help you avoid losing your home.
• Contact your mortgage lender: If you are having trouble making your mortgage payment, contact your lender immediately. The loss mitigation department will be able to assist you with refinancing, loan modification or forbearance options. Explain your situation, then follow up with an email or letter that describes in detail what has occurred that has caused a financial hardship, and then submit documentation to the lender to support your situation.
• Maintain your residence: stay in your home. Most of the recent government assistance programs are based on owner-occupied housing. Once you move from your property, you will lose many protections afforded by these recent laws.
• Contact an Approved Housing Counseling Agency: Contact the Department of Housing and Urban Development (HUD) and find a HUD-approved advocate to liaise between you and your mortgage lender. The housing counseling agency should be well versed in all government programs that can benefit you. The housing counselor should be aware of any private or local organizations that may offer assistance. Assistance from a HUD-approved housing counselor must be free.
If, after speaking with the housing counseling agency, you decide that your best option, due to your financial situation, is to sell your property to avoid foreclosure; There are other options, including: short sale or deed in place. A short sale is when the mortgage holder accepts less than what is owed on the mortgage. This usually happens when the mortgage is greater than the value of the property. It would be necessary to contact an experienced real estate agent who has successfully handled short sales in the past. A deed in lieu is when you voluntarily return your property to the lender. If you choose this route, your credit will not be damaged as much as if you went through a foreclosure; while the benefit to the lender is that they will not have to go through the foreclosure costs of the property.
In summary, the first step in avoiding foreclosure is to contact your mortgage lender and fully explain your financial difficulties. Send a detailed follow-up email or letter to your lender with supporting documentation of your hardship. Second, seek help from a HUD-approved housing counseling agency. Thoroughly explain your situation to the HUD-approved counselor and be cooperative by providing any requested documentation to support your situation. They should work on your behalf to help you save your home or, at the very least, help you minimize the damage to your credit.