Facing Foreclosure? Here Are 5 Important Steps to Take

If you have fallen behind in your mortgage payments, and you know you can’t catch up, your bank will inevitably begin foreclosure proceedings against you. Instead of sitting back and waiting for the process to start, there are five steps that you should begin immediately. Following these steps will put you in a better posture as you go through a foreclosure.

1. Contact Your Mortgage Lender

Your mortgage lender is the company that financed your home. Since there are many types of mortgage loans, mortgage service companies work as lenders’ agents. They process loan documents, accept monthly payments, deal with customers, and process payments to investors. When a homeowner becomes past due, they will get a phone call or letter from either the lender or the mortgage service company.

One way to stay ahead of a foreclosure is to contact your mortgage lender. They are humans who understand and are sensitive to families’ issues that get them behind in their payments.

Reaching out to your mortgage lender gives homeowners insight into how a delinquent mortgage gets handled. There are several options available that the mortgage lender will discuss with you. These options help homeowners avoid foreclosure. Although there are others, some of those options are:

  • Repayment plans add a little to each monthly payment until you get caught up on payments
  • Reinstatement brings the mortgage payments current
  • Pay off the total loan amount
  • Modification changes or restructures the terms of a loan

2. Get Your Documents In Order

When someone becomes delinquent in making payments, they often stop opening their mail daily. They fear all the notices and demands for payment. However, the first step in digging out of the hole or avoiding possible foreclosure, all documents, must be in order and one place.

Some of those documents include:

  • Loan instrument
  • Mortgage statements
  • Default letter
  • Demand letter
  • Letters regarding foreclosure
  • Notes and other documents from the lender

3. Research The Foreclosure Laws In Your State And Know Your Options

Foreclosure laws are complex and different in each state. Besides notices being posted or mailed, there are other processes for court scheduling and auctioning the foreclosed property. Researching your state’s foreclosure laws is essential for getting the basics.

Even when you know the basics of foreclosure, hiring an attorney for help may be necessary. Besides knowing the law, a foreclosure defense attorney has good mediation experience for foreclosure clients.

A foreclosure attorney will use customized strategies for each case to help homeowners get modifications or other repayment options to save their homes. Therefore, before a sheriff puts a final notice on your home, research your state’s laws, hire an attorney, and learn what options you have.

4. Contact A HUD Approved Housing Counselor

Although you may feel alone and like there is no help around, if you are facing foreclosure there is help. There is help from the Department of Housing and Urban Development (HUD). 

HUD-approved housing counselors have special training to assess financial situations and help homeowners develop plans. There are multiple offices in each state.

5. Consider Selling Your Home

One of the last decisions you will make regarding possible foreclosure is also one of the most challenging decisions you make. It is not taken lightly or without a lot of consideration. That decision is whether it makes sense to sell your home instead as an alternative.

By now, you have heard the mortgage company or attorney mention different ways to get out of your mortgage without the hit to your credit caused by foreclosure. You can sell your home, hope for a profit, and move on with life. Other alternatives to foreclosure are:

  • Deed-in-lieu of foreclosure allows homeowners to turn the deed over to a bank or investors
  • A short sale is a method of selling a house quickly. Usually, no profit gets made on the sale

Conclusion

As you have read, those who have gotten behind in their mortgage payments know the bank will begin foreclosure proceedings soon. Therefore, instead of sitting back and waiting for the process to start, there are five steps that you should start immediately. Following these steps will put you in a better posture as you go through a foreclosure.

LEAVE A REPLY

Please enter your comment!
Please enter your name here