If you have fallen behind on your mortgage payments, you face the risk of foreclosure. That means the lending institution can repossess the property. Once the foreclosure process begins, the court could stick you with a deficiency judgment if the value of the home is less than the total amount owed. In that case, you would not only lose your home but also owe the lender the difference in value.
Dealing with a foreclosure is devastating, but before you wave the white flag of defeat, consider your options to avoid losing your home.
- Never Ignore the Issue – The worst thing you can do when facing a possible foreclosure is to pretend the problem does not exist. Instead, you need to take immediate action to try to have the mortgage loan reinstated.
- Contact the Lender – The second you receive a notification about a pending foreclosure, contact your mortgage lender. While you might feel embarrassed for ending up in this situation, lending institutions deal with this problem all the time. Do not wait for a second or third letter to arrive. At that point, you may not have viable options. Instead, act quickly since lenders have options available.
- Learn Your Rights – As someone with a home mortgage, you have legal rights. Pull out your loan papers to review the clause about late payments. Also, spend time online learning about foreclosure laws and contact an attorney who specializes in real estate law. The U.S. Department of Housing and Urban Development (HUD) is another excellent resource. You can contact HUD by phone to speak with an approved housing counselor or visit the HUD website. Either way, you will better understand foreclosure laws and how to avoid losing your property.
- Catch Up on Payments – If you have assets worth any money, sell them to help catch up on your mortgage payments. Keep in mind that depending on where in the process your foreclosure is, bringing your payments up to date may not be enough to stop the process.
- Don’t Spend – Use the time you do have to cut down on spending. When an attorney goes to court on your behalf, he or she can show the judge you have made corrections that will prevent you from falling behind again.
Remember, mortgage companies are not out to get people. They would much rather have homeowners stay put. At the same time, they need to receive on-time payments. With an excellent attorney on your side, there is a chance of stopping the foreclosure proceedings.
One other important note: There is a good chance foreclosure prevention companies will contact you. Although they have a pitch that makes it sound like they can work magic, you would have to pay a significant fee for their services. With foreclosure hanging over their heads, some people make poor decisions. You need to remain calm and think clearly. Along with the different things you can do to help, seeking legal counsel is by far your best option to avoid foreclosure.