Ways to Avoid Foreclosure
There may be many reasons why a homeowner is not able to
make a mortgage payment. It could be a recent divorce,
unemployment, medical debt or maybe you purchased a home
using an adjustable rate mortgage and the monthly payment
has gone up considerably. But the fact of the matter is,
you do not have to fear that dreaded word of foreclosure.
There are many alternatives to avoid it. Here are some ways
that can help:
 
• Contact your lender and set up a repayment plan. In order
for this alternative to take place, it is very important to
contact your mortgage lender as quickly as possible,
preferably the first month of delinquent payment. Explain
to them your situation and ask about the possibility of a
repayment plan or suspension of payment. Most of the time
lenders will work out a plan unless they find you an
extremely high risk. Be prepared to share your personal
finances with them.
 
•  Modify your mortgage by extending the life of the loan.
This can be done by your mortgage company if you explain to
them your reason for not being able to make payment.
Lenders can modify your loan by refinancing, extending the
loan terms, lowering the interest rate or rolling the
delinquent debt back into your loan. All of these ways can
help you tremendously catch up and be current with your
mortgage payments.
 
• Sell your house before foreclosure. If your lender allows
you to, you can sell your property for an amount less than
amount you owe to the lender. If you can sell your house,
the lender will take the proceeds and usually forgive the
remaining debt you owe. According to the U.S Department of
Housing and Urban Development, you may qualify for this if
your loan is at least 2 months delinquent, you are able to
sell the house within 3-5 months and if you get a new
appraisal for your lender.
 
• Last Resort: voluntarily give back your property to the
lender. This is called "Deed-in-lieu of foreclosure." This
will not save your property, but it is not as damaging to
your credit as foreclosure. You may qualify for this if you
did not qualify or were unable to do the other options or
if you were unable to sell your house before foreclosure.
Your lenders make the decision on this one, so again it is
very important to explain your situation in details and
give them all the information they need.
 
Below is a time line of the foreclosure process so you can
see when to take precautionary action in avoiding
foreclosure.
 
Source: Bankrate.com
 
Day 1: Mortgage payment due today. Borrower misses payment.
 
Day 16-30: Late charge assessed on payment. Mortgage lender
starts making phone calls to you regarding missed payment.
 
Day 45-60: Lender sends "demand" or "breach" letter to you
explaining that the terms on the loan were violated.
 
Day 90-105:  Lender hires local attorney to initiate
foreclosure proceedings.
 
Day 150-415: Property is sold in auction.
 
Day 150-415+: After the sale, some states grant you a
"redemption period" in which you can still re-buy the
property if you get your finances in order.
 
In conclusion, if you are afraid you might fall behind in
mortgage payments in the near future or if you already have
fallen behind in payments, it is very important to contact
your lender immediately and let them know your
circumstances before they start harassing you.
 
 
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Pete Glocker is employed in the Education and Charitable
Services Department at Debt Management Credit Counseling
Corp. (“DMCC”), a 501c(3) non-profit charitable
organization located in Boca Raton, Florida. Pete graduated
from Florida Atlantic University with a BA in Multimedia
Journalism and was a web producer Intern for Tribune
Interactive products Sun-Sentinel.com and SouthFlorida.com.
DMCC provides free financial education, personal budget
counseling, and debt management plans to consumers across
the United States. Debt management plans offered by DMCC
help consumers relieve the stress of excessive debt by
reducing credit card interest rates, consolidating and
lowering monthly payments, and stopping collection calls
and late fees. DMCC financial counselors can be reached for
free education materials, budget counseling and debt
management plan quotes by calling 866-618-DEBT or by
visiting http://www.dmcccorp.org . Pete Glocker can be
reached by email at pete@dmcccorp.org.