Save My Home!

Facing foreclosure? Don't give up - there are many options open to you, as long as you act quickly. This article gives advice on some of the most common ways you can avoid the loss of your home, equity and credit.

Sometimes bad things happen to good people.  Although it’s easy to think that everyone who faces possible loss of their home through foreclosure got into their situation through making bad financial decisions – that is often not the case.  People fall ill and can’t work, get divorced, a partner is disabled or dies, they lose their jobs – there are many different reasons that can cause people to fall behind in their mortgage payments.  And even if it is as a result of a making a poor decision, they still don’t deserve to be humiliated, or to have their credit damaged for up to 7 years, by going through the foreclosure auction process.

Fortunately, there are many possible solutions to avoid foreclosure, but with all of them there are two key factors that matter above all else.  First, do not go into denial – accept that you have a problem, and don’t think some miraculous solution will appear and save you at the last minute.  It won’t!  Second, talk to the lender as soon as you know you can’t make a payment.  They want to help.

Particularly in today’s economic environment, lenders are reluctant to foreclose on homes if they can avoid it.  The last thing they want is to have hundreds of thousands of houses on their books, in a declining market.  They are in the lending business, not in the real estate business.  You will find that their loss mitigation department has a number of programs available to help – as long as you talk to them soon enough.  Time is your enemy when it comes to foreclosure, but if you are talking to the lender you can probably work something out.

For example, two of the options available are loan modification – where the terms and/or interest rate can be changed, or forbearance –  where the delinquent amount can be added on to the mortgage principal.  These solutions are available when the financial problem is temporary and you will be able to resume payments in the future.  If the problem is deeper than that, and you can no longer avoid the loan, there are still ways that the lender can help.  They can allow time for you to sell the home, if you and a real estate agent think that can be accomplished in a relatively short time.  Or, if you don’t have equity in the property, in some circumstances they will allow you to sell the property for less than you owe (called a “short sale”), or even allow you to walk away from the property and just give them the deed for it (“deed in lieu of foreclosure”).

The one thing you can be certain of is that, even of you have substantial equity in your home, if it goes to foreclosure you will not see any of it.  By the time the lawyers have finished, any surplus will have disappeared.

Unfortunately, it is a fact that most people facing foreclosure will do nothing about it until the very end.  They may try to refinance, and hope that will come through in time, but it usually doesn’t.  So they end up with a couple of weeks before the auction is due to be held, and very few options left open to them.  At that point, their only hope is usually to work with a private investor to see if they can salvage some of their equity, or at least save further damage to their credit by having someone take over their property.

So, the best course of action is always to talk to the lender early in the process, and to work with them to resolve the situation.  You will find them easy to talk to, and very understanding – their loss mitigation people deal with this every day.  But, if it is too late for that, try to find a reputable and knowledgeable private investor who is experienced in helping people to avoid foreclosure, and talk to them about the options they can offer.