Foreclosure tips: What you need to know
If you receive a foreclosure notice:
Don't ignore it. The more behind you become, the harder it is to reinstate your loan and the more likely you will lose your house. Contact your lender as soon as possible. Lenders do not want your house. They have options to help borrowers through tough financial times. Open and respond to all mail from your lender. The first notices you receive will offer good information about foreclosure prevention options. Later, mail may include important notices of pending legal action. Failure to open mail will not be an excuse in court. Know your mortgage rights. Read your loan documents so you know what your lender may do if you can't make payments. Learn about foreclosure laws and timeframes. Understand options. Information about foreclosure prevention can be found at www.fha.gov/foreclosure/index.cfm. Contact a HUD-approved housing counselor. The U.S. Department of Housing and Urban Development funds free or low-cost housing counseling nationwide. It can help you understand the law and your options, organize your finances and represent you in negotiations with your lender. Find a HUD-approved housing counselor near you at (800) 569-4287 or TTY (800) 877-8339.
Prioritize spending. After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending to make your mortgage payment. Look for expenses to eliminate, such as cable or satellite TV, memberships or other entertainment costs.
Use assets. Do you have assets -- a second car, jewelry, life insurance policy -- that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job? Even if these efforts don't significantly increase your available cash, they demonstrate to your lender you are willing to make sacrifices to keep your home. Be careful with private foreclosure prevention services. You probably don't need to pay fees for foreclosure prevention help. Use that money to pay the mortgage. For-profit companies may contact you promising to negotiate with your lender. While these may be legitimate, they will charge you -- often two or three month's worth of mortgage payments -- for information and services your lender or a HUD-approved housing counselor can provide free if you contact them. Don't lose your house to scams. If any firm claims it can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD approved housing counselor.
Source: U.S. Department of Housing and Urban Development