Tips for Avoiding Foreclosure

Before offering tips on how to prevent foreclosure, I'd like to clarify what it is.

Foreclosure is very similar to your car being repo'd.  You purchased a home and have not been making the payments for the last several months.

If you have lost your job or simply find yourself unable to make your mortgage payments, there are several ways to prevent this process from happening to you and your family.

1. Be proactive.   Contact your loan servicer immediately.

   a. You can find the contact information on your monthly mortgage bill or coupon book.

   b. Lenders can work out plans to allow you to stay in your home. Recently, banks have changed their ways and are much more willing to work with you and offer a plan.

   c. Be prepared to disclose detailed financial information.

   d. Provide requested information in timely manner.

   e. Open mail and respond to calls from your loan servicer promptly. Failure to respond in a timely manner can result in more foreclosure actions and additional cost.

2. Consider refinancing your loan.

   a. Refinancing to a fixed-rate, fully amortized lower-cost loan may help. Rates are currently at historical low levels.

   b. The FHA offers a program that helps homeowners with good credit refinance. It's called FHA Secure.

3. Talk to a housing counselor.   HUD approves trained counselors to work with can be found on the Government HUD Website.   ( Avoid "Foreclosure Counselors" that use hard sell tactics and require you to pay them up front before they have helped you.)

4. Get in touch with your local government agencies. Your city, state or county may offer programs for people having trouble making their mortgage payments.

5. Notify your other creditors.   You may be able to lower interest rates on your credit cards or consolidate some of your other loans. You can put the savings toward your mortgage.

6. Create a budget.   You may find areas you can save and put the money toward keeping your home.

8. Beware of anyone who says you don't need a real estate professional or title company when selling your home.

9. Do not sign over the deed to your property to any organization or person - if you are not working directly with your lender to get your debt forgiven. There are a number of scammers out there looking to take advantage of people who are having financial problems.

10. Consider a "short sale."    A short sale is a real estate sale in which the proceeds from the sale fall short of the balanced owed on the mortgage. You need your lenders permission to go this route as they will be taking the hit. The advantage of a short sale is on your credit. A foreclosure has a significantly worse effect on your credit rating. Consult with a licensed Realtor when considering a short sale. There is much to know about making this option go smoothly.

If you find yourself running siginificantly behind of your payments, take advantage of the various free sources of help, whether it be a goverment agency or a licensed Realtor.

Best wishes, Shel


Sheldon Goldberg
Broker, DREAM REALTY
727-512-6030