Foreclosure Article


Avoiding Foreclosure of Your Home

What is Foreclosure?

This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you also would owe HUD an additional amount.

 

Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible.

 

Contact Your Lender As Soon As You Have A Problem

Many people avoid calling their lenders when they have money troubles. Most of us are embarrassed to discuss our money problems with others or believe that if lenders know we are in trouble, they will rush to collection or foreclosure.

 

Lenders want to help borrowers keep their homes. Foreclosure is expensive for lenders, mortgage insurers and investors.

 

Lenders have workout options to help you keep your home. However, these options work best when your loan is only one or two payments behind. The farther behind you are on your payments, the fewer options are available.

 

Don't lose valuable time by thinking your problems will quickly correct themselves. Contact your mortgage lender to discuss your situation as soon as you realize that you are unable to make your payments. While there is no guarantee that any relief will be given, most lenders are willing to explore every possible option.

 

Finding Your Lender - Check the following sources for lender contact:

  •  Your monthly mortgage billing statement 

  •  Your payment coupon book 

  • Web links or customer service numbers found under "help for homeowners" lenders 

 

Information To Have Ready When You Call:

  • Your loan account number 

  • A short account of your situation

  • Recent income documents (such as Pay stubs; Benefit Statements from Social Security, Disability, Unemployment, Retirement, or Public Assistance. If you are Self-Employed, have your tax returns or a Year-to-date Profit and Loss Statement available for reference) 
  • List of household expenses 

 

Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance, you must complete the forms and return them to your lender quickly. The completed package will be reviewed before the lender talks about a solution with you. The sooner you call; the sooner help is available.

 

Do Not Ignore Mail or Phone Calls From Your Lender

If you do not contact your lender, your lender will try to contact you by mail and phone soon after you stop making payments. It is very important that you respond to the mail and the phone calls offering help. If your lender does not hear from you they will be required to start legal action leading to foreclosure. This will substantially increase the cost of bringing your loan current.

 

Credit Counseling

If you don't feel comfortable talking with your lender, you should immediately contact a HUD-approved housing counseling agency and arrange an appointment with a counselor. A counselor will help you assess your financial situation, determine what options are available to you, and help you negotiate with your lender. A counselor will be familiar with the various work-out arrangements that lenders will consider and will know what course of action makes the most sense for you and your family, based on your circumstances. In addition, the counselor can call the lender with you or on your behalf to discuss a work-out plan.

 

To find out more about HUD-approved housing counseling agencies and their services, please call 1 (800) 569-4287 on weekdays between 9:00 am and 5:00 pm Eastern Standard Time. You can also get an automated referral to the three housing counseling agencies located closest to you by calling 1 (800) 569-4287. To look at the list of these HUD-approved agencies by state on the HUD web site, click here.

 

When you call a consumer credit counseling agency, you will be asked to provide current information about your income and expenses. Make sure you ask if the agency has a charge before you sign any documents!

 

Explore Loan Workout Solutions

First and foremost, if you can keep your mortgage current, do so.  However, if you find that you are unable to make your mortgage payments, you may qualify for a loan workout option. Check with your lender to find out which of these options may be available.

 

If Your Problem Is Temporary - Call Your Lender

  • Reinstatement: Your lender is always willing to discuss accepting the total amount owed to them in a lump sum by a specific date. They will often combine this option with a Forbearance.

  • Forbearance: Your lender may allow you to reduce or suspend payments for a short period of time after which another option must be agreed upon to bring your loan current. A forbearance option is often combined with a Reinstatement when you know you will have enough money to bring the account current at a specific time in the future. The money might come from a hiring bonus, investment, insurance settlement, or a tax refund.

  • Repayment Plan: You may be able to get an agreement to resume making your regular monthly payments, in addition to a portion of the past due payments each month until you are caught up. 

 

If it appears that your situation is long-term or will permanently affect your ability to bring your account current – Call Your Lender

  • Mortgage Modification: If you can make the payments on your loan, but you do not have enough money to bring your account current or you cannot afford the total amount of your current payment, your lender may be able to change one or more terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways:

    •  Adding the missed payments to the existing loan balance.

    • Changing the interest rate, including making an adjustable rate into a fixed rate. 

    • Extending the number of years you have to repay.

  • Claim Advance: If your mortgage is insured, you may qualify for an interest-free loan from your mortgage guarantor to bring your account current. The repayment of this loan may be delayed for several years. 

 

If Keeping Your Home is Not an Option -- Call Your Lender

  • Sale: If you can no longer afford your home, your lender will usually agree to give you a specific amount of time to find a purchaser and pay off the total amount owed. You will be expected to obtain the services of a real estate professional who can aggressively market the property.

  • Pre-Foreclosure Sale or Short Payoff: If the property's sales value is not enough to pay the loan in full, your lender may be able to accept less than the full amount owed. This option can also include a period of time to allow your real estate agent to market the property and find a qualified buyer. Monetary help may also be available to pay other lien holders and/or help toward paying a few moving costs.

  • Assumption: A qualified buyer may be allowed to assume your mortgage, even if your original loan documents state that it is non-assumable.

  • Deed-in-lieu: Your lender may agree to allow you to voluntarily "give back" your property and forgive the debt. Although this option sounds like the easiest way out for you, generally, you must attempt to sell the home for its fair market value for at least 90 days before the lender will consider this option. Also, this option may not be available if you have other liens such as judgments of other creditors, second mortgages, and IRS or State Tax liens. 

 

Selling Your Home

If you need to sell your home, there will be many questions you have to answer. You will need to find how much your house is actually worth, and you will have to find a real estate agent you are comfortable with.

 

Avoid foreclosure prevention companies.
You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender.  While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.

Don't lose your house to foreclosure recovery scams!
If any firm claims they 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.

Special Disaster Relief Options - Call Your Lender

If your property has been damaged by a natural disaster; or if you have been called up for active military duty or affected by a national tragedy, there may be additional assistance available.

 

For additional information you may wish to view these links:

HUD has a toll-free number for servicemen and women with questions concerning their mortgage. For more information, call 1-888-297-8685 between the hours of 7 a.m. and 7 p.m. Central Standard Time on weekdays.


Comments:

On 5/17/07
Maria  said
My situation is this. I moved last June to Naples, my salary is $1450.o monthly my monthly mortgage is $1560.oo Plus assessment $ 270.o. I looking for help a new plan to help me out. My credit score is excellent and my payment are on time never late

QUESTIONS

  • i rent a house that is going for auction. do i have to keep paying him rent or can i keep that months rent so i can move out. how long do i have to move when it is sold.
  • Need mediator immediately= have been fruitlessly looking with no success . HOA looking to foreclose on me..........illegal fines never served to me= I am sure you know the scenario as it is very common now a days. Senior on disability and they go after us as they know we have no one to help us due to finances. If you know of ANYONE please let me know......602-705-3326 So far they have stolen 2 peoples homes that were disabled= one had sold her income property to pay them off then they continued to harass her & she had a stroke. Another women ended up on o2 due to black mold from roof leak th
  • My house was sold at auction on May 28,2014 while i occupied it. I was away out of town and returned today. The locks have been changed and the mortgage co transfers me to the legal dept who wont give me any info on the sale. The county recorder has no info on the sale yet and the sheriff suggested i call landlord tenant line and they cant help because i am not a renter. They suggested legal aid. so here i am . 1 How do i get the things out of my house 2.who do i go to for help
  • My house was place in auction we spend about 30 years living there my original loan was 50.000 by USDA how do I get the full information. sold auction quantity and excess of funds I have contacted Home Equity Invs they informed me that the house was auctioned for 38.000 and i have excess of funds 16.000 how do I check if is true.
  • I owned a house in 2005- when everything boomed it was way overpriced and there was a 1st and a 2nd. I went through a divorce and lost the home as it was upside down. It went into foresclosure and I never heard another word. This now 2019 and I received a letter in the mail saying the 2nd mortgage wants to settle with me for $5000 on a $92,000 note from that house- that was 13 years ago! Can they even do that? My house was upside down and then foreclosed on and sold.
  • My proprty is seduced to be sold today at a Trustee's auction. I had a new loan approved for past two weeks that would pay the existing note in full, the trustee deliberately withheld the final payoff statement until 4:59 p.m. on the day prior to the foreclosure, making it impossible to fund on the new loan in time to stop the sale. Is there anything we can do to stop the sale and buy ourselves a few days to get the new loan closed?
  • I'm a female, single,on disability,recovering from liver transplant and chemo treatments for a rare lymphoma. My HOA initated fore closure for non payment of Assn fees. Im trying to resolve this with hardship modification loan.My mortgage co is working with me. I'm on a fixed income and can't hire an attorney. Can the foreclosure process be stalled until I get this done? thanks
  • If house is foreclosed on, what does the new owner need to provide to the old owner and how long does the the old owner have to get out by law?
  • How do I find out if there is a sale date for my home that is in foreclosure?
  • MY HOUSE IS IN FORECLOSURE NOW, WITH A SALE DATE OF NOV 13. CAN I DECLARE BANKRUPTCY AND KEEP MY HOUSE?

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OTHER LEGAL RESOURCES

  • State Bar of Arizona
    www.azbar.org
  • Maricopa County Bar
    www.maricopabar.org
    Referral number 602-257-4434
  • Pima County Bar
    www.pimacountybar.org
    Referral number 520-623-4625
  • National Domestic Violence Hotline
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ORGANIZATIONS

Documents

Horne Issues National Mortgage Settlement Consumer Alert to Arizonans ReadSpeaker

.pdf  AzMortgageResource.gov ReadSpeaker

RELATED ARTICLES

Predatory Lending Schemes and Scams

Information for Homeowners Facing Loss of a Home

County Tax Assessors

Where to Find an Attorney for Specific Legal Advice

Loan Modification Frequently Asked Questions

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

Horne Issues National Mortgage Settlement Consumer Alert to Arizonans

WHAT IF I RENT A HOUSE THAT'S IN FORECLOSURE - The Protecting Tenants at Foreclosure Act

FORECLOSURE DEFICIENCIES IN ARIZONA: Will I still owe money after a foreclosure?

Where can I find legal help with a foreclosure?

Will bankruptcy save my home from foreclosure?

Did you know the Arizona Attorney General’s Office has a wide range of statewide assistance programs funded through the national mortgage settlement that could benefit you or people you know?

Mortgage Reaffirmation Requirements Bogus

Renting a Foreclosure

Recovering Excess Proceeds After Foreclosure of Your Home

The Mortgage Forgiveness Debt Relief Act

Veterans Facing Foreclosure

LINKS

Arizona Housing Information

HUD in Arizona

Federal Consumer Action Handbook Online

Arizona 2-1-1

Pima County Courts Self Service Center

See More...

https://www.lawforseniors.org/
https://www.lawforveterans.org
https://lawforkids.org/
https://www.azcourthelp.org/