avoiding_foreclosure

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Avoiding Foreclosure

By: Marybeth | October 23, 2007 | Category: Home and Family

If owning a home is one of the great American dreams, then losing a home must be one of the great American nightmares.

What do you do if you can't pay your mortgage? I found some advice from the Consumer Action Website and the U.S. Department of Housing and Urban Development (HUD). Here are three of the major recommendations I took away:

1. Don't Stick Your Head in the Sand -- If you miss mortgage payments and begin to receive letters from your lender, take action. You're more likely to keep your home if you acknowledge the problem and seek help. This recommendation sounds obvious, but it seems that about 50% of delinquent borrowers ignore the situation, perhaps out of embarrassment, fear, or the expectation that things will improve on their own.

2. Get a Counselor -- HUD sponsors free or low-cost counselors who can explain your options. Search for a counselor in your state or call (800) 569-4287 (TTY (800) 877-8339).

3. Beware of Scams -- Don't sign any documents without getting advice from an attorney, a trusted real estate professional, and/or a HUD-approved counselor.

You're not the only one who doesn't want you to lose your home. Lenders, local government, and neighbors are in your corner--albeit for reasons of self-interest. If your home goes the way of foreclosure, lenders stand to lose 20-60 cents on the dollar; local government agencies could be tapped for tens of thousands in fees; and neighbors could see a drop in their property values.

There are lots of practical reasons (starting with your credit) to avoid foreclosure, but there's also the American Dream factor. It's not as easy to quantify, but it can be a powerful force.

Additional Resources:

Federal Trade Commission - Mortgage Payments Sending You Reeling? Here's What to Do

Federal Housing Administration - You Can Avoid Foreclosure and Keep Your Home

Federal Deposit Insurance Corporation - Foreclosure Statistics (PDF)