Your home is your castle, and owning one’s own home has long been a part of the American dream.  However, when financial problems hit you hard, your home can begin to feel like a burden.  Perhaps you can no longer afford the high monthly mortgage payments, uou have lost your r primary source of income, or you have been in an accident and are racking up huge medical bills.  Whatever the reason, if you are behind on your mortgage payments, the bank may have begun the process of foreclosure.

Things You Can do to Stop Home Foreclosure:

  • Get in Touch with the Lender.  One of the first things a homeowner can do is to get in touch with the lender and open the lines of communication.  Ignoring the problem will not make it go away, and talking with the lender may actually help.  Your lender may have a number of suggestions for things you can do to make the payments, or they may be able to modify your loan so that the process of foreclosure can be stopped.
  • Look for Additional Resources.  Taking a new approach to the way you look at things can often help you make the necessary adjustments so that you can pay your mortgage.
    •  Some people have expensive cars, jewelry, boats, or other items that could be sold in order to generate enough cash to make payments at least temporarily. Trading items with large monthly payments for similar items with smaller monthly payments can make a big difference in a budget.
    • The budget may be able to be reworked so that instead of doing something frequently that uses a lot of money one makes changes, such as eating at home instead of eating out and putting the money saved toward the mortgage.
    • Some people opt to use savings to make the payments.
    • Retirement monies that are accessible may be used to make mortgage payments, but it is important to check on possible tax penalties and weigh this decision very carefully
    • Talk to the lender about possible options to foreclosure.  Although lenders are not required to negotiate or make adjustments to a mortgage loan, it is often in their best interests to work with a consumer.  Some of the options that may be available include:
      • Re-Amortization.  The lender may agree to adjust the terms of the loan and add the value of the missing payments to the loan amount while bringing the loan current.  This can result in higher monthly payments unless the lender also enters into an agreement to lengthen the loan term.
      • Claim Advance.  A private lender may advance the homeowner enough cash to bring the payments up to date and simply tack that amount onto the end of the loan or may simply set a future date for the advance to be paid off.
      • Deed in Lieu of Foreclosure.  This is a voluntary agreement by the lender and the borrower where the borrower effectively returns the real estate to the lender.  If the amount owed by the borrower is more than the current market value of the property, the lender may not agree to this option.
      • Short Sale.  This popular option allows the lender to accept an amount less that the actual amount owed on the loan.  The homeowner can sell the home at a reduced price, payoff their mortgage, and avoid foreclosure.

It is important to be aware that no company can guarantee that a foreclosure can be stopped no matter what is owed.  While there are many legitimate companies that can help you avoid foreclosure, it is important to be aware of possible schemes.  The FTC warned against companies that have you send them their mortgage payments, require up-front payment for services, advise you not to contact your lender, or ask you to give them the property deed while they work things out.