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Home › Articles › Home Matters › Foreclosures

Foreclosures

What to Do If It Happens to You

By Shel Franco

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  • If possible make your payments on or before the due date.
  • If you are unable to meet your original loan terms, contact your lender immediately.
  • Always keep the lines of communication open with the lender – do not avoid phone calls and ignore letters.
  • Be prepared to provide whatever information is necessary to the lender to avoid losing your home.
  • Missed payments and lack of communication from homeowners causes lenders to foreclose.
Why Foreclosure Doesn't Have to Be the End

The most important thing homeowners should know is when you get a missed payment notice from your lender it is not the end, Housser says. "Every state has different laws, and you have time and you have options." This should not, however, cause a sense of complacency. The sky is not falling but there are steps you can take to make sure you start things right away.

The following are options offered by Housser you can consider if you are falling behind on your mortgage payments and want to avoid foreclosure proceedings:

  • Enter into a forbearance agreement. If you or your spouse has suffered a temporary hardship, your lender may be willing to engage in a forbearance agreement with you. A forbearance agreement allows for a temporary change, such as lowering – or in some cases eliminating – your payments for a specified period of time. In order to agree to this, your lender must be convinced that your hardship is temporary and that you will be able to get back on track in the future. Otherwise, they may view forbearance as merely delaying the inevitable.
  • Consider loan modification. A loan modification is similar to a forbearance agreement in that it changes the loan payments. The difference with a loan modification is that it seeks a permanent change to the loan, such as lowering the payment and extending the term of the loan, or incorporating delinquent back payments (if any) into the future payments.
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