People fear foreclosure almost as much as they fear death. But unlike death, foreclosure can be prevented.
Unfortunately, just as some people ignore an illness' symptoms in hopes that it will go away, some troubled homeowners are often afraid to confront their problems and take whatever actions are necessary to save their homes. But with so much misinformation being disseminated, who can blame them? So let's set the record straight.
Contacting your lender is an important first step, and the sooner, the better. It provides you with an opportunity to explain your situation and what steps you are taking to deal with it. Yes, your lender can be your adversary, but that's much later in the process. Right now, the lender can be your best ally. So call the lender early.
Fear. If I miss just one payment, I will lose my home.
The foreclosure process doesn't even begin until you are at least 90 days delinquent on your mortgage. But by that time, you are three months behind, and that's a deep hole from which to try to dig out.
It's much easier to get back on track after missing one payment, so reach out to your lender and ask for help in making up your deficit. Even if you think you might miss a payment or two, let your lender know what's up. Lenders have a financial interest in keeping you in your home and might be willing to modify the terms of your loan or arrange a repayment plan.
Regret. I'll rob Peter to pay Paul until I can get back on my feet.
Many people try to ride out their financial difficulties by depleting their savings or maybe even dipping into their retirement accounts. While using your mattress money might be the right step, pilfering your IRA or 401(k) should be the last thing you do, if you do it at all. Before that drastic step, seek help first. Otherwise, by the time you do seek help, you could be in even more desperate straits and your options will be fewer.
Ignorance. What other choice is there but to lose my home?
There are plenty of choices, but most people don't know what they are. And they won't until they speak with a lender. Yet many delinquent borrowers think they can handle their problems on their own without help, when in fact, most can't.
Panic. I am receiving so many offers from people who say they are trying to help me save my home that they all must be scams.
Yes, there are a lot of dishonest people offering false promises. And if you take up with the wrong one, it could make your financial situation much worse. At the same time, lenders are hiring all sorts of companies to try to make contact with borrowers who won't answer their mail or pick up their phones. So how do you know the good guys from the bad guys?
Beware of cold-callers who don't already have your loan number. If that's missing, the deal is probably bogus. According to Freddie Mac, one of the country's largest mortgage investors, the companies it hires to deal with delinquent borrowers will know that number.
Other tipoffs include upfront fees and pressure to sign something immediately. You shouldn't have to pay anything in advance. Pay only for services rendered. And don't put your John Hancock on anything, especially something that's incomplete, until you have a chance to run it by a financial adviser, your tax preparer or someone you trust.
Terror. My lender is not responding to my inquiries.
Don't give up. Never give up. Again, this is a process, and it takes longer that you think. So be patient.
At the same time, keep detailed records of all your calls. And once contact is made, write down the name of the person with whom you spoke, his identification number, the date and time of your conversation and your recollection of what was said. Also, make copies of all your correspondence and other paperwork. Lenders tend to lose things.
Alarm. To get my lender's attention, I should stop making my payments.
Taking the fear out of foreclosure
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