Nearly 3 million homeowners received foreclosure notices in 20091. Some sources say that total may reach 4 million in 20102. People facing delinquent mortgage payments can find the situation spiraling out of control. Fortunately, there are steps that can make the situation more manageable.
Don’t wait until the delinquency becomes a crisis
If you suspect you may have difficulty making your monthly payment, talk to someone before you miss the first one. Counseling services such as BALANCE offer experts in foreclosure prevention and are freely available to homeowners. They can help you understand the foreclosure process and how you can avoid it.
Also, talk to your lender to see what solutions they can offer. Many have programs that will allow you to stay in your home while making reduced or delayed payments.
Know what options are available
There are a number of federal programs, such as Making Homes Affordable, that allow lenders to provide loan modifications and refinances to at-risk homeowners. Your lender will be able to tell you which of these programs you qualify for.
If you are unable to work out a payment program, you may still be able to avoid foreclosure with a short sale. In a short sale your lender accepts less than the outstanding mortgage balance when the property is sold. Be aware that this process can affect your credit and not all lenders accept short sales. Before you list your home be sure to speak with your lender and research the credit effects.
Be on guard
Be aware of companies offering foreclosure counseling or loan modification services for a fee. Free counseling is available and your lender is the only one that can modify your existing loan.
Avoid anyone who pressures you to sign documents you haven’t had time to review or don’t understand. Strong-armed tactics are a key warning sign of fraud. If you aren’t comfortable with the person you’re dealing with, walk away.
As an SMCU member you can talk to our team of specially-trained representatives even if your mortgage is with another lender. They can review your alternatives and recommend programs that may be right for you.
Mortgage delinquency can be difficult. By working with reputable agencies and your financial advocates at SMCU, you can make the process easier and emerge from it with as little long-term damage as possible.