Ways to Avoid Foreclosure
By Donovan Baldwin
Today, a large number of homeowners are facing foreclosure and many wonder what steps they should take. Those facing foreclosure should be well educated on the subject. For example, homeowners should familiarize themselves with their local and state foreclosure laws, their rights as homeowners, and so forth. With that said, it is important to remember that foreclosures are preventable.
Of course, if you are reading this, you may be past that point. However, all is not necessarily lost even if you miss a payment or two, even though some lenders will prepare for foreclosure after only one or two missed payments.
Most lenders do NOT want to be stuck with a home that isn't producing any income anyway, and then have to spend more money to try to get it sold...usually at a loss of some sort, either though a "short sale" or just because they might not be able to get enough to recoup their losses.
In most cases, reputable lenders will be willing to work with you to help you stay in your house, even if they have to accept lower payments for a while, or even a skipped payment here or there.
Of course, if they DO WORK WITH YOU, it will be on the assumption that you are doing everything you can to get back on your feet. When the decisions are being made, your previous payment history will usually carry some weight with them, as will your candor and honesty when you discuss WHY you cannot keep up payments right now.
Even in the worst case scenario, you will not be removed from your home right away. Still it's easy for a lender to start the process of foreclosure, so, don't fall behind in your payments, and, if you do, update the lender immediately and keep them updated.
We both know that, my telling you that you should make your monthly mortgage payments on time, doesn’t mean that you will...or even that you can!
If things are going well, you are probably making your payments anyway. It is only when bad things happen, such as being laid off from work, or being out of work due to an injury, that you even begin to think about ways to avoid foreclosure.
Don't go there first. Instead, speak to your lender. If the lender understands that your financial troubles are only temporary, and, if you have a previous history of on time payments, they should be willing to work with you.
Once everything starts falling apart, either because your situation is not resolved, or, because the lender will no longer work with you, there are still ways to avoid foreclosure...at least for the moment.
The first rule is, even if the lender does not seem to want to give you a break, never ignore their warnings and phone calls.
Even if you do not believe you will be able to keep your home, it is important, for the record, to be in constant contact with, and be trying to work with, your mortgage holder. At the very least, they will be able to advise you about the process, and help you avoid further problems.
OTHER TIPS ON WAYS TO AVOID FORECLOSURE
Keeping in mind that the first goal is to keep making payments, at least some kind of payment, if you have things that can be converted into cash, such as jewelry or a second car, do so. It might not be a lot, but, it may just give you the money you need to get your mortgage up-to-date and in good standing...or at least, keep the lender from foreclosing on your home.
While selling stuff on Ebay is relatively easy, making a profit while doing it is a bit trickier. If you just have a couple of items and want to pick up a few quick bucks, then sign up and have at it. However, if you have several items which might be of value, and, which you feel are worth a bit of money, you should do your homework first.
Reminder, even if you are not in perfect standing with whoever holds your mortgage, it still demonstrates that you are trying your best to keep your home if you do SOMETHING to help make at least partial payments on your mortgage.
While converting some of your assets to cash might be a temporary solution, getting a second job is probably a more permanent one.
Increasing your income with a second job, and increasing your cash flow, are good ways to avoid foreclosure and keep your mortgage payments current.
While extra cash, either from converting assets to cash, or by getting a second job, many homeowners facing foreclosure are often surprised, once they sit down and look at their spending habits, to learn just how much money they can save simply by prioritizing spending.
Considering the high cost of things we take for granted, such as gasoline, dining out, cell phones, cable TV, Internet service, lattes, and entertainment, homeowners who never previously had to worry about using coupons, or having a monthly budget, find how valuable they can be when they are looking for ways to avoid foreclosure.
A homeowner facing foreclosure, actually, any homeowner, is encouraged to review and curtail personal spending, and eliminate unnecessary purchases. Many have found that they can actually cover most of their mortgage payment just with the money saved.
While many people use the situation as a prod or excuse to start their own business, this can be tricky. Again, do your research before signing up for any work at home plan or program.
Another, often overlooked, way to reduce the risk of foreclosure, is to actively seek professional assistance BEFORE the only professional who can help you is a bankruptcy lawyer.
In many states, state and local governments, and even some mortgage lenders themselves, provide free foreclosure assistance to homeowners in need. As soon as you suspect that foreclosure may be in your future, you should meet with a representative of one of the agencies specializing in foreclosure help, or a HUD (United States Department of Housing and Urban Development) approved counselor. These individuals who can advise you of your rights, help you understand your particular state’s foreclosure laws, and help you develop a plan of action which may include constructive help on ways of avoiding foreclosure which were not discussed here.
HUD, by the way, offers its own set of tips on ways to avoid foreclosure. You can read them here.
Foreclosure doesn't just hurt financially, either. It is common for homeowners facing foreclosure to experience an overwhelming feeling of dread or doom, that just cannot and will not go away. People undergoing this experience feel genuinely depressed, and this is the time to seek professional help from those who deal with the mind and the spirit...not just the attorneys and accountants.
Finally, the federal government advises homeowners not to fall for foreclosure scams out of desperation. Such actions are sometimes referred to as foreclosure recovery scams. Don't fall for the claim of an individual, or company, if they tell you that they can stop foreclosure proceedings with one signature. If you are not careful, you could still lose your ownership of your home, and, you may become a renter, who can’t afford the new rent, instead.
Don't sign any documents pertaining to your home presented to you by people offering you ways to avoid foreclosure, without first having a reputable attorney, or at least an accountant, review them.
Of course, it may become inevitable for you to accept foreclosure, but, if it comes to that, you will at least know that you have done all you could do to prevent foreclosure.
ABOUT THE AUTHOR
Donovan Baldwin is a University of West Florida alumnus, BA Accounting 1973, and a freelance writer. He is retired from the U.S. Army after 21 years of service. He has also been a program accountant and fiscal consultant for the Florida State Department of Education, and, has been the business manager of a community mental health center, in addition to other managerial and supervisory positions.
In addition to articles such as this one, he has been writing poetry for over 40 years, having had several poems published in literary magazines and periodicals. He has published some of his poetry online at ravensong.4t.com.
Ways to Avoid Foreclosure
Page Updated 2:11 PM Saturday 8/29/2015
