The first and most important step that one can take in preventing the loss of one's home through the foreclosure process is to "communicate, communicate, communicate"! This first step, along with a few others, is detailed below.
Negotiate with the lender. The lender will always work with a client of theirs if the client takes the initiative to communicate any financial hardships that may have caused the default. Negotiate with the lender for a payment adjustment in order to make up for the missed payment or payments. It is imperative that you act quickly in order to prevent the sale of your home, because once the foreclosure process begins you only have 120 to 140 days before your house is sold. Contact your lender to explain your situation and work out a way for you to keep your house. You have the most time and the best chance of being able to negotiate a solution before the trustee files the notice of default. If foreclosure has already begun you must contact the lender during the 90 day period before the notice of trustee sale is posted and filed.
One of the most common causes of failure to communicate is that many homeowners facing foreclosure avoid contacting their lenders because they are upset or embarrassed. Many times the homeowner mistakenly belie the lender will not help them because they feel that the lender prefers to foreclose. In reality, the opposite is true. Banks and other lenders are primarily in the business of earning money by collecting interest on loans that they have made. Their net income is derived by having a specific process in place in order to invest and receive the interest payments. They find it cumbersome to go through the foreclosure process, and usually are not well equipped to manage foreclosed properties. Because of this, most lenders are willing to work with homeowners because foreclosure is more costly for them. It forces them to allocate time and resources to an unprofitable activity. Contact your lender immediately! Do not ignore phone calls and letters from your lender. If you do not inform your lender of your situation, it will be will assumed that you do not intend to pay and the process will go forward.
It is important to prepare well before you contact your lender. You must gather all documents supporting your income and expenses, as well as all loan account information. When you call ask to speak to someone in the customer service department, be upfront about your circumstances and be prepared to discuss your financial situation in detail. Your lender needs to know clearly your financial situation in order to determine whether they are able to offer a solution. Your lender should be able to then offer you one of the following options:
Loan modification: this is when the lender agrees to modify the terms of the loan. As an example, the lender may agree to extend the term of the loan or lower the interest rate of the loan. This option helps you catch up on unpaid payments by making your monthly payments affordable. Loan modification may be appropriate if you have recovered from a financial problem and can afford to make your loan payments if they are adjusted.
Repayment plan: This option allows you to catch up on unpaid payments by adding a portion of the late payments to your regular monthly payments. A repayment plan may be suited for you if you have recently recovered from a short- term financial problem and are now able to resume making your regular monthly payments but need time to catch up on the unpaid payments.
Reinstatement: This is when you are able to pay off the entire balance of the unpaid payments by a specific future date. Reinstatement may be appropriate if you know and can prove to your lender that you will soon be receiving a quantity of money that will allow you to bring your loan account current.
Forbearance: This is when the lender agrees to temporarily reduce or stop your loan payments with an agreement on another plan to bring the loan account current. This option stops the foreclosure process and is combined with other options, often reinstatement.
If you are uncomfortable with negotiating with your lender by your-self or if you want to better understand of what options you have, contact a reputable foreclosure assistance counseling agency. When selecting an agency to work with, choose one from the U.S. Department of Housing and Urban Development’s list of approved housing counseling agencies:
(http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm).
Beware of phony “counseling agencies” that approach you with the promise to advise you on your situation, provided that you pay a large fee!
If you have further questions and need assistance, feel free to contact me direct: Eunece @ Century 21 Sussex & Reilly (312) 404-5501
Other tips for saving your home: http://www.hud.gov/foreclosure/index.cfm
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