Before you go about fighting off foreclosures, it is important to get yourself organized. Don’t be afraid to talk to your spouse about a possible foreclosure. Also, prepare a list of important names and numbers including those of your lender or servicer. The name of your lender or servicer and their address and phone number should be listed on your monthly mortgage statement or mortgage coupons. The term "lender" and "servicer" are often used interchangeably, but you should always contact whatever company you are sending payments to.

• Your account number (located on your mortgage statement or coupon)
• You must be able to briefly explain your situation
• Have a copy of your paycheck stub or other income information
• A list of regular household expenses.

 

In a nutshell, “foreclosure” is a legal process where a bank or mortgage company can take back your home in order to satisfy your mortgage loan to them. If you fail to make your mortgage payments it can result in a foreclosure. This includes first mortgages, second mortgages and home equity lines of credit. A foreclosure can also be due to non-payment of real estate property taxes.

 

After one missed payment on your mortgage, you are technically in breach of your agreement. Although most lenders do not start foreclosure proceedings after one missed mortgage payment, late charges apply and over time can add up. If you continue to miss your payments it will make it harder for you to catch up. Most lenders will start the foreclosure process after you are three payments behind.

If you are wondering what to do once your lender has started foreclosure proceedings, you must firstly contact an attorney as soon as possible. You may also want to contact a MSHDA-approved foreclosure prevention counselor in your county. Many Michigan counties have lawyer referral services that can assist you in finding an attorney.

 

If you are like most homeowners facing foreclosure, you want to keep your home. Perhaps you raised your family in this home and have fond memories of the good times you’ve had. Maybe you have school-aged children, and you don’t want to move them out of the neighborhood or school district and away from their friends. Or, maybe you just dread the thought of packing up and moving.

 

Unfortunately, for about 90 percent of homeowners facing foreclosure, selling the home and moving to more affordable accommodations is usually the best option. If you were unable to make the monthly mortgage payments before, making the payments in the future while trying to catch up on missed payments can be quite a challenge. Understanding the intricacies of foreclosure is the first step to a solution. We find many couples ignore the possibilities that there may be a way out of the mess. Some spouses don’t even tell their partners there is trouble until it is too late. Open and honest communications and a solid work out plan could help you keep your home.

But can you keep your home?

That depends on several factors, which this article explores.

 

If you are facing foreclosure because of a temporary financial setback, such as a short-term layoff or a large, unexpected medical bill, then you have a much better chance of keeping the home. As long as you can afford the monthly mortgage payments going forward, you should be able to work out a payment plan with the bank to catch up on missed payments.

 

 

If you’re behind on your house payments primarily because you’re buried in credit card debt and other debts not secured by your home, you may be able to file for bankruptcy and keep your home. Consult with a reputable bankruptcy attorney in your area to find out whether bankruptcy is a viable option for you and which assets you would get to keep.

 

Don’t dismiss the bankruptcy option before exploring it fully. A bankruptcy attorney may charge you $350 to $400 for the initial consultation, but it is usually worth the cost.

 

 

If you have been paying mortgage insurance, that insurance could offset what the bank stands to lose from your inability to pay and may make it more appealing to work out a deal with you or negotiate a short sale (accepting less than full payment of the loan), so you can sell the home and at least break even.

 

 

The mortgage crisis has weakened the bank’s ability and willingness to foreclose, because they simply cannot handle the vast number of foreclosures. They may be more inclined to cut you a deal that allows you to keep making payments rather than foreclose on you. Foreclosure sticks them with a property they must rehab and sell, and your property’s value may not be sufficient to cover what you owe on your mortgage. Foreclosure usually costs the bank a lot of money.

 

Contact your bank and see what kind of deal they can offer you. They may forgive part of your debt, modify your mortgage to make your monthly payments more affordable, or work out a payment plan with you to catch up on missed payments over time or add them to the end of your mortgage.

 

 

Prior to foreclosure, you can reinstate the mortgage by catching up on missed payments and penalties. If you have family members or friends who are in a position in which they can help you out, consider asking them for a loan to reinstate the mortgage.

 

Caution: Don’t reinstate unless you can start making your regular mortgage payments and have enough money to start paying back the loan from your relatives or friends.

 

 

If you are earning sufficient income to pay your bills but simply overspent your way into foreclosure, can you tighten your belt enough to get back on track? Be realistic. If keeping the home is going to place a significant strain on the family finances, moving into something more affordable may be your best option.

 

For information on how to obtain free or low-cost assistance from a HUD-approved credit counselor, call 1.888.995.HOPE or visit HOPE NOW.

 

 

Freddie Mac’s Don’t Borrow Trouble website advises against borrowing trouble. Under duress, many homeowners panic and seek ways to borrow the money they need to bring their mortgage loan current. This can lead to high-interest loans and the possibility of signing over rights to your home to a con artist who offers what seems to be an easy solution.

 

Work with your lender and reputable professionals (an attorney, credit counselor, mortgage broker, your lender, and/or a Realtor) to determine your best course of action. The person who shows up at your door uninvited and offers to help is usually the wrong choice.

 

Ralph R. Roberts, GRI, CRS and his team of foreclosure experts regularly assist families facing foreclosure and have authored Foreclosure Self-Defense For Dummies (John Wiley & Sons).

The solutions are many when you have someone to help guide you through the maze.

We can help. Others have found our store of knowledge has gotten them out of their foreclosure mess a lot less damaged than they thought would be the case.

Call us today for a free and confidential consultation.