Avoiding Home Foreclosures

Often homeowners see lenders as people who just want to seize homes, and as such try to avoid dealing with them for as long as they can. Rather than make partial mortgage payments, many homeowners will stop making payments altogether, and some even go as far as to ignore attempted communication from the lender (such as letters and phone calls.) This resistance to communication often stems from a fear of losing their home; some people choose to try and ignore the situation rather than negotiating with the group they see as an enemy (the lender.)

As it turns out, that reaction to the potential of foreclosure will actually hasten its becoming a reality. Alternatives to foreclosure do exist, and ignoring those alternatives can indeed cause foreclosure to occur. These alternatives aren't difficult to take advantage of, nor are they hard to qualify for -- they're mandated by law, and the details of them are often included in mortgage documentation.

The first step towards avoiding foreclosure is quite the opposite of most people's natural reaction: as soon as possible, contact the lender. Despite pre-conceived notions to the contrary, the lender should be your first resort when trying to avoid foreclosure. By law, lenders must work with homeowners in "good faith" to help avoid foreclosure. Homeowners don't just benefit from legal protection though -- plenty of economic factors make immediate foreclosure an unattractive proposition to lenders.

In addition to talking to the creditor, people in danger of foreclosure should also consult the Department of Housing and Urban Development. This federal agency helps homeowners work with housing counselors who will (in addition to advising them of their rights) help them avoid foreclosure. Homeowners who choose to work with a housing counselor often find that they've got several alternatives to foreclosure. One of the alternatives to foreclosure, forebearance, gives the homeowner a reprieve from mortgage payments for a period of time. A short term break from payments is nice, but for long term financial problems relief often comes in the form of mortgage modification, mortgage refinancing, or sale of the home in the open market (after which the proceeds are used to pay off the mortgage.)

When faced with financial trouble, just remember: don't panic. There are a variety of solutions available to homeowners provided they're willing to work with their lenders, so there's no reason for foreclosure to even occur. With the assistance of HUD, your lender(s), and/or a housing counselor, you have no reason to fear losing your home.

By: Mr. U
Published: 05/10/08