Avoiding Foreclosure / Stop Foreclosure On Your Home
The Homeownership Preservation Foundation provides distressed homeowners with foreclosure prevention counseling and resources to help preserve their stake in homeownership and avoid foreclosure. This section of our site is meant to help you understand what foreclosure is and what to do if you’re facing foreclosure. These “Fast Facts” and our financial education videos will help you learn about the process.
Preventing Foreclosure
If your goal is preventing foreclosure and you are behind on mortgage payments, or if your payment is for less than the amount that’s due, you’re in default and may find yourself facing foreclosure. You need foreclosure help and want to avoid the consequences of mortgage default, which can be costly, and you want to save your home!
You'll also want to avoid costs involved, which includes late fees and other default-related fees, as a result of default-related services which can include property inspections, property preservation services, foreclosure costs which may include attorneys fees, property title search fees, and charges for mailing and posting foreclosure notices.
Other impacts you want to avoid by defaulting on your loan are severe, and include:
Mortgage Default
If you are in mortgage default, your servicer may start the process. Not only will this add to the costs you will have to pay to bring your account current, but the filing will be a matter of public record. This will make it tougher for you to get credit and buy another home in the future. If you aren’t able to bring your account current or work out another solution, you may not be able to avoid your home being sold at auction. In many states, you also may be responsible for paying a “deficiency judgment.” That’s the difference between what you owe and the price the home sells for at the auction.
Avoid Damage To Your Credit Score.
If you are struggling and are behind on mortgage payments, or you’re already in default, contact your mortgage servicer right away to avoid futher issues.
Many people find it embarrassing to talk with their servicer about payment problems, or they’re hopeful that their financial situation will improve and they’ll be able to catch up on payments. Keeping the lines of communication open is critical to resolving issues with your loan. Staying in touch with your servicer also could save you money and make it easier to bring your mortgage loan current. They are more likely to delay selling or auctioning your home if they are working with you to find a better solution.
If you are having a hard time reaching or working with your loan servicer, talk to a certified housing counselor. Call 1-888-995-HOPE for free personalized guidance from housing counseling agencies certified by the U.S. Department of Housing and Urban Development (HUD). This National Hope Hotline – open 24/7 – is operated by the Homeownership Preservation Foundation.
Pay close attention to your mortgage loan account. Review your account regularly to avoid issues and make sure your payments are credited on time, and that there aren’t any unexpected or unusual fees or charges. If you don’t get monthly statements, check with your servicer to see if you can access your account online. Be assertive. Question any items you don’t understand, and keep good records of communications with your servicer.
Among the items to monitor: Posting of Payments, Improper Late Fees, Too Many Late Fees, Default-Related Fees, and even Bankruptcy Servicing.
It is important to continue to monitor your mortgage account, even during bankruptcy. Make sure your payments are credited properly and on time. Watch for any inappropriate late charges or fees, and keep an eye on your escrow account. These measures can help you avoid foreclosure and keep your home.
You need Adobe Flash Player 9 to view this widget. 
How to Avoid Foreclosure on Your Home
The first step your lender will take in the foreclosure process is filing a Notice of Default. If you think you will be more than 30 days late on your mortgage, to avoid foreclosure on your property you should contact your lender before they issue the Notice of Default. If you know you will be unable to make your mortgage payment, there are some possible options your lender might offer prior to starting the foreclosure process.
Being proactive before your situation esclates, your lender might be willing to propose the following options:
Forbearance
Suspend payments for a short period of time, allowing you time to make up the shortfall. If an agreement is reached, and you are able to meet the terms of the agreement, the lender should not take foreclosure action against you.
Repayment Plan
A lender might be willing to break up a delinquent payment, or payments, spreading the amount over several future payments until the payments are caught up.
Loan Modification
By either re-amortizing the length of your loan, or freezing the rate on an adjustable-rate mortgage, a lender might be able to modify your existing loan to give you a more manageable monthly payment. This may increase the loan amount over the life of the loan, however, the monthly payments would be more affordable for you.
Refinance
A lender might consider refinancing your loan if there is sufficient equity in the property, and possibly including missing payments into the new loan balance. Re-amortizing your loan balance at a lower rate and/or longer loan term could significantly reduce your monthly mortgage payment.
Partial Claim
If you have an FHA loan and meet HUD guidelines, you might be eligible for a Partial Claim, which is an interest-free loan designed to help homeowners reinstate a delinquent loan. This would be an additional loan to your original mortgage, and would be paid back either after the original mortgage is paid off or the property is sold.
Forgiving a Payment
Although extremely rare, a lender may sometimes forgive a missing payment provided you agree to then remain current on your mortgage from that point on. This is an unlikely scenario, however certain hardships might influence a lender to offer this option.
To see which of these options are available to you, speak with a housing counselor by calling 888-995-HOPE. Our HUD-approved counselors can help you navigate through your financial hardship and help you avoid foreclosure.
