According to the U.S. Treasury Department there are over seven million homeowners at risk of foreclosing on their homes. The housing crisis has dropped the prices of homes making it difficult for troubled borrowers to refinance their homes. Also, unemployment is rising causing many responsible borrowers to no longer afford their homes. Ohio is no exception to these problems. Ohio is offering a wider selection of mortgage aid programs than most states. The question is, which mortgage aid program can you qualify for?
First two pieces of general advice that could save your home.
Timing can be everything when avoiding foreclosure in Ohio, or anywhere else, for that matter. Too many households get into financial difficulties and wait too long before asking for help. By then, they do not qualify for most aid programs, and there is little anybody can do. Most government and private mortgage aid programs work best when the borrower is only one or two months behind on their payments.
Stay in your home. Some homeowners leave their home after the first threat of foreclosure from their lender, and expecting the worse, look for alternative housing. This is not a good idea. You should stay in your home as long as you are the owner. Most mortgage aid programs only work when the mortgaged house is your main home. You will not qualify for most loan modification programs if you are not living in the house.
If you find you are going to be 30 days behind on your mortgage payment, you are by definition a troubled borrower. If there is the smallest chance your situation might continue for any amount of time you need to contact your lender. Before contacting your lender you should, however, visit your nearest Housing and Urban Development approved counseling agency.
These agencies are financed by the government and will not charge you a dime for their services. They can provide you valuable information on what aid programs you can apply for, information on foreclosure law and process, and guidance on how to communicate with your lender and write an effective hardship letter. These agencies have lists of contacts for the key people in the loss mitigation departments of the main lenders. Visit the HUD's website for an up-to-date list of approved agencies.
Once you contact the loss mitigation department of your lender and explain your circumstances you can both try to work out a solution for your particular situation. Unlike many people think, banks are not desperate to foreclose on your home the moment you are a few days behind on your payments. Foreclosures are expensive, they are a lose-lose position for the lender and the borrower. Believe it; your bank is nearly as interested in avoiding foreclosure as you are. Lenders and borrowers often can come to three main choices:
1) A reinstatement of the mortgage where you promise to pay your outstanding payments by a certain date. This works well if you know are going to have a source of income in a set period of time.
2) A forbearance period. In this case the lender allows you to not meet your payments up to a certain date. This method is used if you are unemployed, but both you and the lender are confident you will be able to find a job soon.
3) A loan modification. This workout aims to reduce the cost of your monthly payments to an affordable amount and absorbs the late payments into the mortgage to be paid slowly throughout the lifetime of the loan.
There are several alternatives available to you, but they often include some variation or combination of these choices.
If you are an Ohio resident you should also consider calling the "Save the Dream Ohio!" program. This program was created by Ted Strickland, governor of Ohio, in 2008. It is a useful source of information and advice on what alternatives Ohio residents have when they are facing foreclosure. You can call 888-404-4674 orvisit their website.
Another good idea for Ohio residents is to contact the Ohio Housing Finance Agency (OHFA). OHFA is an independent Ohio state agency that provides financial help for low to moderate income Ohioans. They can arrange a low cost mortgage; and provide valuable advice on how to apply for a mortgage aid programs that fits your circumstances.
Whatever choice you choose it is important you take action and find help to save your home. There is help available. Even if keeping your home is not a realistic option, because you really can't afford the home you bought. There are a number of alternatives to help you find a more affordable home in style; without having to declare bankruptcy or foreclose on your home.