What Steps Can You Take to Avoid Foreclosures

For any homeowner, foreclosure is probably the most worrisome word in your vocabulary. The recent spike in home foreclosures in 2008 and 2009 have effected far more than just subprime lenders, and those living beyond their means. If you are facing an impending foreclosure, or you’re simply worried about your ability to pay your mortgage if you lose a job, or go through a divorce, there are steps you can take to help keep your house from going into foreclosure.

The first thing you should always do is talk to your lender before you ever miss a payment. At this stage, they will be most receptive to you, because you are currently fulfilling your financial obligations to them. If you wait until you are already behind, then the hassle of foreclosing on your property, and finding a buyer is less of a concern to the lending agency. If you’ve lost your job, or had a financial emergency, contact your lender immediately and explain the situation. They may be able to give you an extension on your payments, or even lower the monthly total.

HOPE for homeowners is also available. If you are currently underwater on your home, with an adjustable payment, this program should be able to offer some assistance. This program was put into place to allow the Federal Housing Authority to back up home loans in the event of default. If you are at risk of foreclosure, you can contact a HOPE representative, who will work with your lender to lower the loan balance to 90% of the home value. Then the adjustable rate can be refinanced to a 30 year fixed rate mortgage. If the home appreciates, then the owner is then obligated to share some of the equity with the government.

To qualify for HOPE, you must be able to document your income, and you must actually be living in the home. This program does not apply to investment or vacation homes. Housing costs after refinance cannot equal more than one third of current income.

If you want to participate in the HOPE program, you can call your lender, speak with a HUD counselor, or call HOPE at 1-888-995-HOPE.

Ultimately, some homes simply cannot be spared from HUD foreclosure, but if you are realistic and approach your financial difficulties proactively, there is a good chance that you will be able to come to an agreement with your lenders. No lender wants to see a loan dissolve, and no homeowner wants to face ruined credit or bankruptcy.

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