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What to Do When Facing Foreclosure

By Edited Nov 8, 2015 0 0

Although last year’s foreclosure filings were the lowest of the last five years, there were still nearly 2.7 million foreclosure notices released.  Fortunately for many homeowners only about a third of such notices result in actual foreclosures. There are steps that can be taken to prevent foreclosure, but individuals need to be honest with themselves and embrace the situation before they can get out of it.

Step One: Get Help

No one should face foreclosure alone, not only is it important for individuals to be honest with their spouses about financial difficulties but it is even more is even more important to seek the help of a professional.  There are a number of professional firms that know the ins and outs of mortgage delinquency and default resolution.  It is important to do research and find the best firm, while being careful to avoid unsolicited mortgage help, as there are lots of scams out there.

The best time to talk to a foreclosure attorney is at the first notice of default.  Most notices are not released until 30 days after missed payments, so individuals should talk to a professional even earlier if they know they will not make their payments within those 30 days.  Not only do many people not talk to professionals in the early stages, but 70 percent of homeowners never even approach their lenders about renegotiating their payment plan.  Most lenders will be anxious to renegotiate as opposed to putting the house up for foreclosure sale, but if individuals approach their lenders without professional counsel they can often end up signing a worse deal than before.

A good firm will also help an individual take advantage of government programs designed to help with foreclosure.  The federally financed Making Home Affordable program offers loan modification and refinancing.  As of 2010, there is now also available the Home Affordable Foreclosure Alternatives program, which offers lenders financial incentives to approve short sales and deeds.

Step Two: Get Organized

Housing counselors can do wonders for helping individuals keep their homes, but the more information they have the more effective they can be.  Individuals are advised to round up all communications they have had with their lender, their most recent mortgage statements, any foreclosure notices or complaints of sale, homeowner’s insurance policy, at least two months worth of pay stubs, tax returns for all individuals on the mortgage, bank statements, and proof of all other forms of income (social security, child support, alimony, et cetera).

Step Three: Be Creative

If a firm is unable to help, there are still plenty of ways for one to save their home.  Perhaps if one is unable to find a way to save money, homeowners can find a way to make more money.  Renting out a room in a house to a college student is a common option, and can still be dependable as many students’ parents will pay room and board for them.  Another slightly less convenient option is selling one of the family’s cars.  This will save money on insurance and maintenance, as well as putting some money into an individual’s pockets.  In major metropolitan areas, this serves as an effective and green way to potentially save enough money to begin making mortgage payments again.  Most cases of foreclosure can be avoided by individuals who get the right help and think outside the box while doing everything possible to save their home.

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