Tips for Preventing ForeclosureIf you are worried about making your mortgage payment a couple of weeks later than usual, you should immediately let your loan servicer know. Make sure the servicer has documented the anticipated date you will be making the payment.
If you are unable to make your mortgage payment:
1. Don't ignore the problem.
The further behind you become, the harder it will be to bring your loan current and the more likely that you will lose your house.
2. Contact a Certified Housing Counselor.
Housing Counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. To find a Housing Counselor in your area, click on Housing Counselor Search.
3. Open and respond to all mail from your lender.
The first notice you receive will offer good information about foreclosure prevention/loss mitigation options that can help you have a positive outcome. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse later in the foreclosure process. Keep every piece of mail sent to you, so you can get it to your housing counselor.
4. Know your mortgage rights.
Find your loan documents and read them to try to get some idea as to what will happen if you are unable to make your house payments. You should consider contacting a Certified Housing Counselor, because you may have several options. Do not be afraid to ask what each mortgage loan document means. Your housing counselor will be able to explain what is in the loan documents, as well as explain Virginia's foreclosure laws and timeframes. Be sure to take these loan documents with you when you see your housing counselor. Make certain you understand everything explained to you.
5. Understand foreclosure prevention options.
Your Certified Housing Counselor has valuable information about foreclosure prevention (also called loss mitigation) options. Be sure you understand these options when they are explained to you by your Housing Counselor. If you do not understand it the first time, do not be afraid to ask to have it explained again. Many of the concepts are complex and difficult to understand.
6. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses--cable TV, memberships, entertainment--that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage. Your Certified Housing Counselor will help you put together a spending plan. Initially, it will be a "crisis spending plan". Once you are able to get some cash together to start paying back your delinquent payments, you and your housing counselor will work together to development a more stable spending plan.
7. Use your assets.
Do you have a second car, jewelry, whole life insurance policy or other assets-that you can sell for cash that can be used to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate you are willing to make sacrifices to keep your home. Your housing counselor will give you more tips on how to tighten your spending.
8. Avoid foreclosure prevention companies.
You don't need to pay fees for foreclosure prevention help. Instead,-use that money to pay your mortgage. 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 provided free by your Certified Housing Counselor.
9. 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, don't do it. 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. If there is any doubt at all, get assistance from a Certified Housing Counselor.
10. Don't ignore the problem.
The longer you wait to get help, the harder it will be for a Certified housing counselor to assist you. Losing your home may be the price you pay for thinking something will come along to fix everything. Action is what will make that happen.
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