When you’re faced with the possibility of losing your home to foreclosure, what do you do? The huge increase in foreclosures over the last year means that banks and lenders are overloaded with homes, and are likely to work with you rather than against you. Here is some advice from Forbes about how to stop a foreclosure.
First, make sure that you are completely honest about your financial situation. If you figure out what went wrong, you’re putting yourself in a better position to come up with a solution. Look over your original loan documents, income and budget. Also, examine your expenses and monthly spending. You might want to work with a housing counselor. If you do, make sure the counselor is approved by the U.S. Department of Housing and Urban Development.
Next, contact your lender as soon as possible. Talk with them about your specific situation, and whether there might be a short-term solution. If your problem is temporary, stemming from recent unemployment or medical bills for example, they will likely work with you to keep you in your home. Many lenders will work out a monthly repayment plan that will get you caught back up in your payments.
Your lender might also modify the terms of your loan. President Barack Obama’s $75 billion mortgage relief plan, which recently launched, aims to help up to 9 million homeowners in danger of foreclosure by working with lenders on loan modifications. Check out MakingHomesAffordable.gov for more housing relief information.
If your lender will not work with you on a plan, you may have to sell your home. The lender will set a deadline for you to find a buyer and pay off your mortgage balance. They might be willing to accept a smaller sum, but keep in mind that you might owe income taxes on the difference.
You might consider hiring a lawyer if you can’t come to a deal with your lender. You are likely eligible for some form of free legal aid, and you can contact the National Association of Consumer Advocates or the National Association of Consumer Bankruptcy Attorneys to find a list of lawyers in your area.