Avoiding Foreclosure

Few things are as devastating as losing your home. Sadly, it's not always inevitable. In many cases the foreclosure could've been avoided with some outside help. Be aware of some of the hidden difficulties that will arise if foreclosure occurs.

Finding a new home. Don't believe that it will be better to let the foreclosure happen, because after you lose the home, you will still need to find a new place to live. All too often, the price paid in rent will be almost as high if not higher than the current mortgage payment. Remember: The owner of the property needs to make his mortgage payment, too, so he's going to charge a rental payment that's higher than his mortgage costs.

Deficiency judgment. It's not uncommon that the sale of the home is insufficient to cover the remainder of the mortgage. When the property has been damaged, or market values have dropped, you may end up with a bill in the tens of thousands for the difference.

Despite what many people think, most lending institutions are not anxious to foreclose. It's a last-ditch effort to recover their money and minimize their losses, and it's an incredible hassle. Most lenders would rather avoid it, if possible. There are multiple sources for help that you should be aware of, and most lenders will be happy to hear that you are going to try to keep the home rather than just await a foreclosure.

Housing Counseling Agency. The US Department of Housing and Urban Development maintains a list of HUD-approved counseling agencies. Call (800) 569-4287 to find the agency nearest them.

FHA-Insurance fund. FHA borrowers may qualify to have HUD make a one-time payment to bring the mortgage current. See www.hud.gov/foreclosure for more information on the requirements to qualify.

Different mortgage program. Talk to a loan officer about the possibility of refinancing the mortgage to a more affordable program.

Special Forbearance. Many borrowers can qualify for a new payment structure if you've had an increase in the cost-of-living, such as unexpected medical expenses, or a decrease in wages. This payment structure will allow you to repay the lender in a given time frame.
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Compliments of the Business Booster Collection and
Wendy Taylor, Financial Stragegies, Capitola